This year's trend towards– let's face it folks– inflation continues. Just as our bodies are 75 percent water, the average modern car contains 2400 lbs. of steel; the average SUV is comprised of 3000 lbs. of the stuff. In late 2007, steel was selling for $535 a ton. Today? How's $1,035 per ton grab you? It's grabbing steel execs you know where. No, there. According to Automotive News, tensions are rising as steel makers tear up contracts. They're demanding more money from automakers, who are of course resisting. Regardless, ArcelorMittal, the world's largest steel maker, is about to impose a $250 per ton surcharge. That's about 20 to 40 percent over what current contracts stipulate. Long story short, look for the price of your next car to be about $500 higher. Also, this might be a great time to invest in carbon fiber futures.
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what if the automakers just make cars with $500 less steal! The would be lighter. get better MPG and just all around better. but that wont happen because in America if the new model isnt heavier then the old one its not a good car.
Nope, actually, if it isn’t heavier than the old one, it won’t meet government safety requirements for front and side impact and rollover. The safety regulators and environmental legislators don’t talk to each other much.
I wonder if it may also make used cars more expensive, as more cars are recycled and newer cars are less attractive.
Higher prices for Gas, Food, Energy and Cars. I wonder what this does to the distribution of wealth/currency. I’m guessing less money in peoples pockets in the short term. People need money to purchase (ie. cooperate), I think the slower money gets to people the slower the economy. Although competition and needs probably mean increase productivity one way or another. Hopefully not China style for me.
It must have added a bit to the scrap value of those big old SUVs which are too expensive to fill with gas!
So what’s driving up the price of steel and other metals lately?
So what’s driving up the price of steel and other metals lately?
The same folks who buy oil futures are f*ckng us up big times.
Coal goes up, fuel goes up.
And we’re all going down.
The falling dollar is a large portion of price increases. Pretty much all commodities have been going up because of our dollar’s troubles. Rising gas prices to transport the steel also figures (not a lot, though). There’s probably more to it, too. The exchange rate hasn’t halved, so there’s gotta be another reason steel has doubled in a matter of months.
I rather see it as finite resources – how much iron ore can we refine easily in this day and age?
Looks like Saturn’s time to shine is now….too bad they don’t make cars like they did in the 1990s.
I live and die with the price of steel in my job as a director of purchasing and inventory management for a national electrical distributor. There are several things driving the price of steel up:
1.) the weak dollar has driven up the price of cheap imported steel from Brazil, Mexico, Taiwan, Korea and China to levels just about equal to domestically produced hot and cold roll
2.) On top of that President Bush signed off on a pretective tariff 1/1/08 which is what caused the initial spike
3.) Domestic capacity is a fraction of what it was 30 years ago
4.) There have been a couple of mills who have had blast furnaces and open hearth furnaces go down. One in particular was the source of most automotive steel. As a result, the autos have gone out and bought futures anywhere they can find them, which has hit the manufacturers of other steel goods (in my case steel electrical conduit)
5.) with the weak dollar, more and more scrap is going overseas instead of being recycled here in the US. They can get more $$$ for it.
We have seen the price of steel conduit increase about 36% since January 1 with no reprieve in sight until at least the end of Q3. We were told to expect prices to soften at the end of Q2…..doesn’t look like that’s going to happen. Just be happy cars aren’t made of copper…
Perhaps this will help speed a change to the use of high strength steels as the differential between mild steel and alloy steels becomes a smaller percent of the total cost.
Perhaps rising costs will force the adding of lightness.
Lots of iron ore and lots of scrap steel. I don’t think finite resources has much to do with this one.
chicken comes home to roost!
no support of U.S. steel industry!
Would construction of steel-frame buildings in China and India contribute to the steel shortage/price increases to any measurable extent?
Couple of questions:
* How much does steel have to rise to bring it near parity with more traditionally expensive materials?
* How much have those same materials (aluminum, magnesium, carbon fibre- and similar) risen alongside steel?
There’s a potential opportunity here: if steel and it’s derivatives are no longer as dramatically cost-effective, it’s more feasible to use alternatives. I’m not (at all) saying that aluminum or carbon fibre is suddenly on-par–far from it–but that the gap is slimmer, which might push their use downmarket somewhat.
The one thing the planet has more than enough of is iron ore. But extracting it is expensive, and turning it into steel more so — due to the rising energy costs. And it’s not the lightest thing in the world to transport – coming and going!
Yes, regulation is part of why cars are so heavy — but do we need six- or eight seat cars? To drive two people, or one?
And if cars were generally made lighter, then collision forces would also be reduced. Worth thinking about. Mittal doesn’t mind – people need his steel.
oldyak:
Yeah, that’s the ticket!
We should ‘support’ the U.S. steel industry, along with the U.S. pizza industry, film industry, tattoo industry.
Let’s put EVERY U.S. industry under the wise guidance of politicians.
They alone can make the best decision about how much we should pay in taxes.
Also, only politicians, due to their vast experience in actually running businesses, know what percentage of our tax dollars should go to their nephews, cousins and that nice man from Archer Daniels Midland.
Those a-holes using corn for ethanol are to blame for this outrage!!
Oops….wrong topic.
There’s a “U-Pull-It” type auto junkyard not too far from where I live. Last year at this time, the junkyard was packed with cars, probably over a thousand junk vehicles. Last week I drove past this particular junkyard and noticed their inventory of junkers was maybe one tenth the usual. I though they had gone out of business, so I stopped to inquire. Nope, business is better than every. As it turns out, scrap metal prices are so high, it doesn’t pay to leave the cars out in the yard waiting for used parts scavengers. The cars are brought in, parts that are in demand are removed, the rest of the vehicle is processed, crushed and hauled off to the scrap metal dealers. This seems to be going on with other parts of the economy as well. It appears that the USA is now worth more as scrap than as a going concern.
Oh great. Now we get to watch politicians haul the CEO’s of “Big Steel” in to interogate them on why the price has doubled. Maybe Maxine Waters will threaten to socialize them like she did with “Big Oil”.
I wonder when they are going to haul “Big Ed” in front of them and ask why our schools are failing to produce graduates that can read and write.
It should be an incentive to build lighter cars.
We can hope.
If the falling dollar means importing steel costs more US dollars, then does this mean that the US iron ore industry and US steel industry is going to make a comeback? Will the steel mills of the Great Lakes make a comeback? Will the iron ore mines of northern Minnesota come back?
Or does it costs of a lot of expensive imported energy to mine and make, thus negating the home field advantage of a weak dollar?
Australia exports lots of iron ore to China. China needs energy to import that ore and make steel with it. So we have to compete with China to buy energy, they to turn their Aussie ore to steel, and us to turn our Minnesota ore to steel.
China has lots of coal and so do we, so energy is not an issue. They do not have an EPA nor OSHA (Occupational Safety and Health), though. So if they need a new foundry, they just raze a village and start building. Here, it takes a couple of years to just do an environmental impact report.
Gregzilla, how much is a scrap car worth to a recycler? For years around here they gave $40 for a dead car. I don’t have dead cars (though that could be arranged) but I would think the value of these has gone up a lot.
Here’s something real interesting:
http://www.scaled.com/projects/gmcar.html