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Steel Prices: How we got here and what could happen

  • Thread starter Ox
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Big B

Diamond
Joined
Jun 26, 2009
Location
Michigan, USA
Question for the active shop owners. As a percentage of your work, how much do you spend on stock for those jobs? My shop is pretty much inactive lately because it's difficult to run a one man shop when I'm in Arizona and my shop is in Michigan so I only do walk in type repairs anymore but when I was more active the cost of materials was usually less than 10% of the total cost of the job.

Thousand dollar order would be about $100 or less for material. Double the cost of material to $200 and your price just went to $1,100 for the job. It isn't like if steel prices double the job quote needs to double too.

My biggest month ever in my one man shop was $23,500 in sales. Materials for the month was just over $2,000. I had some wiggle room to absorb price increases but if prices got too out of hand for me everyone else would be in the same boat and customers would be paying more no matter where they had the work done.
 

Ox

Diamond
Joined
Aug 27, 2002
Location
West Unity, Ohio
I am sure that there is a wide range of % of materials.


I just quoted a job this morning that is 2/3 material.
I really don't like that ratio, but it is very little work to heavy/expensive material...


A job we ran a cpl years ago was some big bearing blocks for one of the local steel mills.
I got $2000 each for machining them, and they were about 2000# blocks I think.
So that was close to 50% material.

Then there is the jobs like you mentioned.


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Think Snow Eh!
Ox
 

CITIZEN F16

Titanium
Joined
May 2, 2021
"Scrap metal..couldn't give away previously"

Local yard paying $290.a ton for washer/dryers, steel siding, and such. I see my landlord just dumped a multi- spindle, hardinge, and other machines that had been left by a previous tenant.

Wonder what the lag is from scrap price paid to pricing on finished stock?

My scrapper friend says the low hanging fruit/ easy picking scrap is getting pretty thin.

That is the highest price I have heard, last I checked in the Quad Cities area 9-10 cents a pound for magnetic steel. So weird how in some areas you can go to websites and get prices, here you have to call.
 

Ox

Diamond
Joined
Aug 27, 2002
Location
West Unity, Ohio
I used to push to get the customer to supply the material, for obvious reasons. Can't do that for your own product but surprisingly, you can often pull it off for job shop work. One less headache, yay !


I completely dissagree.
I hate customer supplied material - as a rule... especially on regular running products.

Timing is NEVER on your side.
They will buy just enough material, and not a stick extra, and it will show up just in time to make their parts by the doo date.
Sure hope that you don't have any other customers schedules to work around!

And then you have no buying power with anyone either.


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Think Snow Eh!
Ox
 

chip_maker

Stainless
Joined
Jan 14, 2006
Location
Moira, NY USA
I completely dissagree.
I hate customer supplied material - as a rule... especially on regular running products.

Timing is NEVER on your side.
They will buy just enough material, and not a stick extra, and it will show up just in time to make their parts by the doo date.
Sure hope that you don't have any other customers schedules to work around!

And then you have no buying power with anyone either.


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Think Snow Eh!
Ox


+1 and to expand on this, I also like to have the ability to specify what mill the material comes from, especially for aluminum and stainless.

I do some parts in 2024 that get black anodized. Kaiser or Alcoa only. Foreign stuff is nothing but headaches at anodize.

All materials are not created equally :willy_nilly:
 
Joined
Apr 14, 2018
Location
Airstrip One, Oceania
And then you have no buying power with anyone either.
I don't want buying power. I don't want to be a free bank for 90 or 120 days on a 2-10, net 30 invoice. Marking up the material doesn't cover what it costs you both mentally and financially and time-wise.

Of course everyone is different but boy do I love just being a machinist and not a financier.

Even you will have to admit, in the current situation it would be a godsend :)
 

Ox

Diamond
Joined
Aug 27, 2002
Location
West Unity, Ohio
A) I don't have >60 day accounts.
Not interested in your parts if you can't bankroll your own business.

B) I don't have any contracts that I am tied to deliver parts at X value - no-matter what the market does.
I will never agree to that.
I lived (managed) through 2004, and I seen that destruction.
I have told [potential] customers to hit the road that have asked for that insanity.

So - no, other than I have oodles of potential large jobs looming that would likely land - had we had cheaper material, in normal circumstances those jobs would be looming in another hemisphere anyhow. So, it really isn't an issue for me.

The job that I quoted this morning that is 2/3 material, came in maybe 20% higher in costs than my Jan / 20 quote.
I have not seen the huge markups in barstock as I hear from the coil jockies. (tube, fab, stamp)


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Think Snow Eh!
Ox
 

standardparts

Diamond
Joined
Mar 26, 2019
That is the highest price I have heard, last I checked in the Quad Cities area 9-10 cents a pound for magnetic steel. So weird how in some areas you can go to websites and get prices, here you have to call.

From what I understand the original go to scrap yard was/is Alter Metal Recycling and they are paying $260. A few months ago a new company opened with a really nice operation--paved yard-- no mud new buildings and such and it seems they are in a price war and pay $290. So that is what I know other than when I drive in to the shop there is a parade of sway back overloaded pickups with grossly overloaded trailers lined up to get in.

My friends seem to have been "mining" all the junk piles on farms and hauling tear outs from restaurants and such.

All boils down there is money to be made if your willing to get off your ass in work for it.
 
Joined
Apr 14, 2018
Location
Airstrip One, Oceania
A) I don't have >60 day accounts.
Not interested in your parts if you can't bankroll your own business.
Hmm. There's an interesting attitude ... Not saying one can't - in fact, a lot of the time I had to - but in any business there is only so much money. I can spend it on better machines or tools or software or I can spend it materials and free financing. (Markup never covers the real cost of buying and storing materials).

If I wanted to be in the materials business I'd start a metals service center or something. I didn't want that. I wanted to make parts. Removing materials from the equation meant I could do what I was getting paid for better.

At least that was my take on it. Like I said, other people have other viewpoints.
 

Mcgyver

Diamond
Joined
Aug 5, 2005
Location
Toronto
A) I don't have >60 day accounts.
Not interested in your parts if you can't bankroll your own business.

I bet if you did a poll of that here, percentages in the very high 90s' would agree.

I have to be a contrarian. I give them there 60 or 90 days but price with huge margins and get the work because I know 99.9% of all the other little small time guys like us will pass.

The weenie in treasury who feels like a hero saving his firm 0,4% in their cost of capital for the extra 30 days he pummelled me for has no idea they paid 12% more for the privileged of doing so
 
O

otrlt

Guest
I bet if you did a poll of that here, percentages in the very high 90s' would agree.

Of course I have to be a contrarian and go against the grain. I give them there 60 or 90 days but price with huge margins and get the work because I know 99.9% of all the other little small time guys like us will pass.

The weenie in treasury who feels like a hero saving his firm 0,4% in their cost of capital for the extra 30 days he pummelled me for has no idea they paid 12% more for the privileged of doing so :D

The thought of waiting 60-120 days is called "business suicide". The flow of revenue becomes a constant wave... of waiting for money. It makes very little difference of how well you are paid if you have too lend a costumer the money for them to write you a PO.
 

CITIZEN F16

Titanium
Joined
May 2, 2021
From what I understand the original go to scrap yard was/is Alter Metal Recycling and they are paying $260. A few months ago a new company opened with a really nice operation--paved yard-- no mud new buildings and such and it seems they are in a price war and pay $290. So that is what I know other than when I drive in to the shop there is a parade of sway back overloaded pickups with grossly overloaded trailers lined up to get in.

My friends seem to have been "mining" all the junk piles on farms and hauling tear outs from restaurants and such.

All boils down there is money to be made if your willing to get off your ass in work for it.

Mud isn't too bad as long as sharp objects aren't buried in it. Nothing like those yards that make you drive around through dirt and mud dispersing your mixed load at multiple weigh stations.
 

Mcgyver

Diamond
Joined
Aug 5, 2005
Location
Toronto
The thought of waiting 60-120 days is called "business suicide". The flow of revenue becomes a constant wave... of waiting for money. It makes very little difference of how well you are paid if you have too lend a costumer

I rarely lend out my costumes. If you don't understand or have a handle on your cash flow, working capital and cost of capital and how extending terms will impacted them, you're right, its not for you
 

chip_maker

Stainless
Joined
Jan 14, 2006
Location
Moira, NY USA
When I first started out I had a 90 day payer. I did pretty steady work for them so once the money started rolling in I was getting paid 2-3 times a month.

And like Mcgyver does, I charged them for that privilege.

Waiting for the ball to start rolling sucked, but once it was rolling it was rolling in!

Sent from my SM-G991U using Tapatalk
 

cnctoolcat

Titanium
Joined
Sep 18, 2006
Location
Abingdon, VA
As a contract metalworking company, if you don’t offer credit terms, you’re just not going to get a lot of business from corporate America.

The bigger the customer, the more the Net 60 expectation. Holding them to it is the key...

Our customers range from 1% -Net 15 direct deposits, to 75+ days check-in-the-mail.

Just gotta figure out how to make it all work...

ToolCat
 
O

otrlt

Guest
As a contract metalworking company, if you don’t offer credit terms, you’re just not going to get a lot of business from corporate America.

The bigger the customer, the more the Net 60 expectation. Holding them to it is the key...

Our customers range from 1% -Net 15 direct deposits, to 75+ days check-in-the-mail.

Just gotta figure out how to make it all work...

ToolCat

Yes ToolCat, payment terms are the norm. Initially, my customer wanted 60 day term, but politely I insisted on 30. This is an S&P 500 NYSE listed company worth more than 10 billion, they can pay "little me" or go some where else.

The reality ToolCat, 30 day terms; means 45, 60; means 75, and if you are a complete brain-dead fool 90; means 120.

The root of my reply? negotiate and get the best terms and be prepared too walk away if they resist.

Also, insist that the money goes directly to your bank, You do not want to have a mail carrier handling any money at all.
 

standardparts

Diamond
Joined
Mar 26, 2019
Mud isn't too bad as long as sharp objects aren't buried in it. Nothing like those yards that make you drive around through dirt and mud dispersing your mixed load at multiple weigh stations.

Market update from the "scrappers"----haul ass and bring in as much as you can. Scrap prices--downward trend next two weeks.
 

Ohio Mike

Titanium
Joined
Oct 30, 2008
Location
Central Ohio, USA
"The tariffs were marketed to the American people as a way to reduce the merchandise trade deficit. The problem is, it didn’t. The trade deficit in goods (excluding services) was $750 billion in 2016; it increased 22% to $915.8 billion in 2020. In March the trade deficit set an all-time high monthly record."

One of the problems is that during this time window you also have a covid lock down. The lock down only impacted employment of a rather small group of the total work force namely restaurants, entertainment and the like. To ease the pressure on those impacted the government implemented stimulus checks. But everyone (at least those in that less than $100K year group) got that check. Those that were employed can't go on vacation and now they have even more disposable income. So what do they do? They get on the internet and buy "stuff". That stuff being consumer goods that are made in Malaysia, China, Korea, etc.
 
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