Steel costs are at an all-time high, since March 2020, steel prices are up a staggering 215%. These price increases are impacting everyone who is buying or selling steel products.
August 30, 2021 | Emma Tyborski
What is causing these price increases?
In the spring of 2020, the COVID-19 pandemic hit the United States, mandated shutdowns and other necessary measures were put in place to keep people safe. Due to these shut downs, several domestic steel mills shut down and the demand for steel products decreased. In late summer 2020 the demand for steel began to pick back up. This high demand was a major boost but because of the shut down, many steel mills cannot produce enough steel to meet the current demand. Another factor to the price increases throughout the steel industry is the restriction on the domestic metal supply. Foreign metal is harder and often more expensive to buy since the Section 232 tariffs on imported steel products was put into place. Additionally, it takes a significantly longer time to import foreign steel. And if all of those factors weren’t enough, there’s also an international shortage of steel.
- August, September, and October 2020: The price of steel increased about +7.5%.
- December 2020: The steel price had a major uptick of about +20% from August 2020.
- January 2021: The price of steel jumped up +37% from August 2020.
- February/March 2021: The price of raw steel is up over +75% from August 2020.
How does this effect the snow and ice industry?
Many manufacturers have needed to increase their prices due to the supply and demand of the current steel market. Manufacturers are acutely aware that price increases on their products are not seen as favorable by customers and are trying to keep the increases to a minimum.
Terry Wendorff, the President of Sno-Way International, Inc. was willing to talk to Snow Plow News to explain why snow plow manufacturers are in such a tough spot, “At this time every vendor we use to build a plow or spreader has been passing along price increases. Freight cost and packaging has gone through the roof just to add to the problem. Then try to get the materials, I don’t care if it is stainless steel, mild steel or high strength steel, there are spot shortages every day”.
Snow Plow News interviewed a number of dealers and manufacturers in the snow and ice industry to get an idea of what some of the price increases look like.
At preseason, Fisher Engineering, SnowEx and Western took a modest price increase and added a 4% surcharge. Due to the on-going raw material cost increases, these companies made a 7% price increase and added and additional 6% to the surcharge, resulting in a total of a 10% surcharge. The net result is a 13% total increase in price plus surcharge over the preseason price plus surcharges.
To break it down in terms of product pricing, a part that cost $100 in January 2021 now would cost $117.96 in August 2021.
Boss originally announced a 1.5% increase in April 2021 and then an additional 5% in early July 2021 for a total 6.5% increase.
So what does this mean for the consumer and the future? Unfortunately, it means consumers will pay more for snow and ice products. Looking at the data and market trend, demand and shortages do not seem to be slowing and price increases could be more of the norm. “To sum it up I have never seen this in my 45 plus years in business”, Wendorff said.
Stay tuned to Snow Plow News as we will cover what inventory looks like for the snow and ice industry in an upcoming blog.