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Six Reasons Steel Conduit Costs are on the Rise

July 5, 2016 | Best Practices | Electrical

What you can expect for your upcoming projects

Steel conduit pricing hasn’t fluctuated much during the past year; however, we have experienced an increase the last couple months. We understand this may affect your scheduled or upcoming projects. That’s why we put together this list of reasons why we’re experiencing this price increase in steel conduit. We feel it’s important you understand what is driving the increase to help you manage your projects and avoid some sticker shock.

steel conduit costs on the rise

  1. Job cuts and decreased profitably
    Last year, U.S. steel manufacturers lost billions of dollars due to steel import dumping, primarily from China. "Dumping" is defined by the Commerce Department as an instance when "a foreign company sells a product in the United States at less than its fair value." China produces as much as steel as the rest of the world combined. But as China’s growth slows, the excess steel is washing up overseas. That excess production is causing U.S. steel manufacturers to suffer from decreased profitability and lost jobs. (WSJ)
  2. Declining inventories, fewer imports
    In response to an oversupply in the steel industry, the U.S. has imposed and increased tariffs on certain imported steel products. With less steel imports and smaller inventories, steel prices in the U.S. are on the rise. The increase in steel prices is helping American producers rebound from the prior year, but is creating problems for some steel buyers. (WSJ)
  3. Declining steel production
    In the last week of May 2016, domestic raw steel production had a capacity utilization rate of 75.9%. That means U.S. steel producers are capable of increasing production by 24.1%, but are not. Domestic shipments for 2015 stood at nearly 87 million tons, a nearly 12% decrease over what American steel mills shipped in 2014. (AISI)
  4. Longer lead times steel conduit
    Lower inventories are being felt throughout the supply chain. While steel buyers rush to buy as much metal as possible, steel producers haven’t had time to replenish their inventories. Average delivery times in the U.S. have increased to 6.2 weeks, from 3.6 weeks when the year started, according to Platt’s steel index.
  5. Improved auto industry
    As per the World Steel Association estimates, the automotive sectors accounts for roughly 12% of the overall global steel consumption. An improving labor market, low interest rates and cheap gasoline have all contributed to a healthier auto industry in the United States. Strong demand from the automotive sector has put upward pressure on prices.
  6. Enacted infrastructure bill
    Fixing America’s Surface Transportation (FAST) Act passed in December 2015 and will provide $305 billion for roads, bridges, tunnels, and mass transit projects through 2020. With about 60% of steel use in infrastructure applications being rebar, these infrastructure projects will contribute to steady steel consumption, keeping the pressure on steel prices.
What can you expect from Van Meter?

commodities managerVan Meter has been working diligently since April to stay ahead of the situation at hand. According to Commodities Manager Heather McDonald, “The price we see today is the lowest it will be well into the 3rd quarter of the year which is why we bought heavy early on and fully maxed out our inventory space in all of our 15 locations. Every extra inch of warehouse space is filled with conduit.” McDonald assures customers that Van Meter is currently stocked and prepared to handle their orders.

 

If you have any questions or concerns about your upcoming steel conduit project, specifically large or staged projects, please contact our Van Meter Commodity Team at 1-800-247-1410.


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