Businesses will have to wait for relief on steel prices until next year when the dollar is expected to strengthen.
By Jim Ostroff, Associate Editor, The Kiplinger Letter
How much higher will steel prices go this year? Quite a bit. The largest steel users can expect to pay as much as $1200 a ton for hot-rolled steel and $1300 for cold-rolled by July, about twice the cost in January. Small companies should figure prices will be about $200 higher than those, a typical premium for purchasers with less buying power.
The spike will wallop makers of cars, trucks and tools, as well as residential and commercial builders, with no relief likely before fall. And with the economy so weak, these companies can’t hope to pass along much of the costs to consumers. Highway and municipal building construction firms could get badly singed because they typically sign fixed-price project contracts with state and local governments.
Some price pullback is expected next year. After summer’s peak, hot-rolled prices will fall to $900 per ton by December due to the usual seasonal slackening in demand. But prices should get the stool kicked out from under them in 2009, once the dollar starts to post firm gains against most other currencies, as we expect, making imports more attractive.