NATION Prices rise with steel shortage

One official said the steel shortage could be the worst since the 1970s.
PITTSBURGH (AP) -- Jeffrey Nayhouse, owner of Allegheny Fence in Pittsburgh, is contending with the unpleasant reality of rising steel prices. Nayhouse says the price of steel wire and tubing has increased 30 percent or more.
One of his suppliers wrote to him last week that "due to the existing environment, we cannot print pages as quickly as the [price] increases are taking effect."
Nayhouse isn't alone. Many domestic steel users are being pinched by rising prices, which are being attributed to a weak dollar, high consumption in China and inflated prices for raw materials.
Prices were at 20-year lows just a few years ago, which steelmakers attributed to a worldwide glut of capacity.
Industry players say the weak dollar has inflated the price of imported steel, discouraging foreign steelmakers from shipping products to the United States. Prices of imported steel were further inflated by ocean freight rates that have doubled or tripled over the last year.
Raw-materials prices up
Prices for raw materials have gone up as well. With more than half of U.S.-produced steel made from melting junked cars, refrigerators and other steel products, prices for some high-grade scrap are approaching $300 a ton, compared with less than $200 a few years ago.
Meanwhile, the price for steel made from iron ore has more than doubled over the last year. Coal, used as a fuel for some steelmakers, has doubled in the past year. Such raw material shortages have forced Weirton Steel and some other producers to cut back production.
All of that has led to a steel shortage. One of Nayhouse's suppliers, Mark Magno, vice president of marketing for Wheatland Tube, said the industry could be facing its worst shortage since the 1970s.
"Some people I've talked to said it wasn't this bad back then," Magno said.
Wheatland has cut production at its plants in Mercer County and Warren, Ohio, to four days a week because it can't get enough steel to convert into pipes to sell to Allegheny Fence and other customers.
Wheatland national sales manager Gerald D. Slithery Jr. wrote that company's customers to advise that the problem will likely continue "at least through the first half of 2004."
Blaming China
Many blame China for its ferocious appetite of raw materials.
"China is basically screwing up the world market for steel prices right now," said Don Lawrence, purchasing agent for George L. Wilson & amp; Co., a Pittsburgh building materials distributor.
John Anton of consultant Global Insight says the 200 million-ton glut that industry leaders were griping about a few years ago has disappeared because of worldwide demand, mill shutdowns in the United States and raw materials shortages.
Experts are telling merchants of steel goods to warn customers about higher prices for the rest of the season.