Last week, I read a report from Goldman Sachs that said that we have seen the bottom in the steel prices for carbon based products for the year.    This was report was shortly followed by e-mails from the mills to notify us that they will begin raising prices starting January 1 2010.

This past friday, Nucor sent an e-mail to us saying that we they are going to raise their prices.  I know a lot of people who keep saying that the prices won’t hold, and they are waiting for a decrease.  I would not wait to lock in prices, for we are already seeing improvement in the economic.  The first positive sign is that the auto industry said that they will increase volume to 12.0 million from a low of 8 million.

The dollar is still decreasing against all the other currencies, so there will be less imports of steel.  The last reason that I just herd today was that China has decided that they would invest a lot of the dollars that they are holding into hard assets; such as oil, steel, cooper, and other commodities.

I am getting concerned with the availability of steel even for the most basic products.  We have seen our lead time increase this past week.  In addition to this pricing has gone up over 20 percent as well.  If you want to protect yourself I would suggest that you contact us about setting yourself up on a contract.  The contract will insure that the product you want will be there.  It does not protect against steel price increases.  These contracts usually last for about three months.

Under normal conditions we are able to secure tonnage and pricing for the entire term.

Steel prices, and the rest of the commodities will rise next year for the following reasons.   The United States has started printing money to help battle the economic crisis, and this is not a political statement just an economic fact.  When this has been done in the past it has caused a rise in the inflation rates.  The second effect of this economic crisis is that the dollar continues to decline against other currencies and this will also cause the prices for all the hard assets to increases.

With the weaker dollar it will be harder for many of the service centers, and mills to bring in imported steel.

Steel Prices are heading up, and I believe that they will move pretty fast over the next couple of months, and will be back above last years pricing.  There are several reasons for this.  The first one is that the Steel Service Centers are carrying inventory at historic lows.  So any increase in demand over the next couple of months will drive prices up.  The Second reason, is that the Mills have been forced to idle a lot of capacity, so they will be slow to react to the demand which will cause pricing to rise as well.

In the next couple of days I will also give reason why this will be a long term trend.