Talked to a scrap dealer recently who mentioned something about steel prices coming down. Do you think that will happen?
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That's not what I heard. The lumber yard where I get my metal roofing from said to get my orders in before the end of June. He said prices would be going up.
Dave
"Talked to a scrap dealer recentlabout steel priy who mentioned something ces coming down"
Bird,
NO WAY, for the average person to know, but sounds like he wanted whatever you had, and also.........based on everything I've read, seen, and heard ( I have a very close friend in that industry), not talking a scrap yard, he's an MBA/CPA and senior manager for one of the nations largest "recycler's" of scrap everything, and take it from me (him actually), the bottom is not about to drop anytime soon.
Day to day, and week to week, anybody's guess.
Jon
The scrap market is very much a spot market and has a small relationship to the price of steel..
Most scrap yards are full or near full and in fact much of the scrap pipe line is near capacity.. The price of Steel is not only based on scrap prices but also raw iron prices and those are still up at near record levels..
China is using 30 % more steel this year than last, the US military is using a lot more steel this year than last, and consumption worldwide is at record levels..
> the US military is using a lot more steel this year than last
Are they really a big enough user to affect the market price?
-- J.S.
Not traditionally, normally the Navy beats the Armies use by a lot but this year the army has bought a lot of it. Every increase in demand when the demand exceeds supply further tightens the price spiral.
Yes, I'm sure you're all right. I was looking for a bright spot. I've been doing a little research and this spring there was a lot of speculative buying which has apparently slowed down now. And then there's oil . . . .
We have all we need in place for a really big run up in inflation.. First the dollar is dramatically weaker with nothing to prop it up. It's going to drop further!
Second America has a tremendous debt level. The recent war has cost this nation 200 billion dollars and thats 10 billion dollars more than the whole Vietnam war cost.
Back then we delayed dealing with the debt too long and the result was some giant inflation (around 22% one year)
Since the dollar is weaker (around 35%) that means the things we import will be more expensive, oil for example.. Wood has jumped 100% and there is little hope of it dropping in the near term..
You know about steel but the price of copper, etc is up as well.
There has been a 25% increase in the cost of transportation with the increase in gas prices,Insurance reflecting the loss on the stock market is set for rather dramatic increases, and much of the cost of our day to day stuff crept up a bit last month again reflecting the increased cost of getting that stuff to market as well as the increase in cost of the raw materials..
About the only thing unaffected by recent cost increases is the wages. With all the increases in costs there is steady pressure to increase wages to reflect that pressure.. Family budgets are straining right now and you are seeing it in the increase of late payments for credit.
There are two appraches towards the coming inflation.. First there's the hunker down mentality. Convert everything you have towards cash and pay off as much as you can to minimize your debt load and make it relatively easy to pay your bills..
The second is to convert everything into appreciating assets. Good realestate for example and use the appreciation of that asset to increase your position.
If We get some double didget inflation ad your house appreciates at that pace (realestate if it's not already over priced, appreciates at or above the rate of inflation)
thus a house that's worth $300,000 today if we get 10% inflation will be worth $330,000 a year later and $363,000 the following year and $399,300 the year after that.
Think of it as a pay raise.. The value of your house increases but your payments remain fixed (as long as you don't have an adjustable rate mortage)
The only weakness is that with inflation comes a business slow down, as long as you have a secure job it's cool. You ride it out increasing your net worth every year. If you should lose your job in a business slow down then you'll need to scramle to stay afloat..
The good thing is with a steady increase in the value of your house you can borrow against it (very easily) to help you make those payments..
The only people that are really hurt are those on fixed incomes or those with few real assests..
> a house that's worth $300,000 today if we get 10% inflation will be worth $330,000 a year later and $363,000 the following year and $399,300 the year after that.
We just sold the house we bought for the kids in October '01. That went from $185k to $383k. The main house in Hollywood I bought for $345k in November '98, the identical building next to it was on the market at $659k, don't know the actual selling price. But offers over asking are pretty common here.
-- J.S.
Last year we had no real inflation, a couple or three percent and that no usually enough to offset price flucuations.
Prices are highest in the spring since most people want to move after school lets out and before it starts again in the fall. If you want to buy, buy after holloween and before Christmas.
If you want to sell list it by Febuary and it'll certainly sell by the fourth of July..
The prices in California are the exception to my little rule.. Since the demand for property is so strong the prices are moving up far from the rate inflation would suggest.. conversely when prices do adjust, the worst hit will be the California housing market..
I just heard on NPR this morning that China is starting to worry about how quickly its economy is growing. They want to slow it down a little. The Chinese reporter said that China would be reducing its imports of raw materials in the coming months.
If that's true, the price of steel should head back downward.
China has been making some remarkablely smart moves lately. She'll be a super power yet... Considering that she was almost a third world antion untill the 80's that's a remarkable change!
"I just heard on NPR this morning that China is starting to worry about how quickly its economy is growing. They want to slow it down a little."
Glatt,
Yeah, that's what they say, IMO, they're worried about their banking system collapsing, which is why they've pegged their currency to the dollar, and have been funding it all visa vi, our debt.
Jon
> been funding it all visa
Wow, I wonder what the limit is on China's visa card.... ;-)
-- J.S.
"funding it all visa vi, our debt"
-->vis-a-vis
Sorry, spelling police ambush.
We decided to buy a little stock in steel production... hopefully the Chinese will grow several hundred percent in the next few months.
In the industrial capital equipment business, we are seeing steel and alloy surcharges of 1 to 5% on items like pumps, mechanical equipt, etc. All added on within the last month or two.
Forklifts too have had a surcharge added, some manufactorers have added as much as 5%. considering the portion of the forklift that is raw steel that's dramatic.. You take a $100,000 forklift add 5% to it and that's a $5,000 increase overnight!
Hollow structural steel box tubing prices for us are up over double what they were less than a year ago. It used to be cheaper to throw excessive steel at something than to do the engineering calc to size it right, but no longer!. Wouldn't count on prices dropping immediately- the only theory I've heard that's worth anything is Chinese demand, and by conservative estimates China's economy will grow by 10% this year. Most of the steel scrap yards I've seen are EMPTY, not full. They're still ripping people off though- unless they're very small or in the scrap business, many companies don't shop around for scrap dealers to buy their scrap. They simply let the guy pick up the bin and pay for it whenever it's full, and I bet he's paying the same price as he was last year! The price for scrap delivered to the mills has reportedly MORE than doubled up here in Canada.
Won't make much of a dent even if prices drop.
For instance, on just one small thing like 1/2" EMT. Price just a short time ago was $13 per 100, last week it was $35 per hundred and today it's $33.50 per hundred.