AISC suggestions to minimize the impact of structural steel price increases

CHICAGO—Increasing global demand for both structural steel and steel scrap has triggered significant domestic increases in the producer price of structural steel during 2008. During 2008 the mill price for wide-flange structural steel has increased 28 percent to just over $1,000 per ton. Other structural materials such as HSS and plate have experienced increases into the $1,100 to $1,200 per ton range. This increase is typical of the price volatility that has been experienced by all construction materials since early 2004. Global demand peaks have triggered price volatility and availability concerns for cement, gypsum, copper, plastics, and lumber products during this period.

At the present time, structural steel remains readily available in the U.S. market with service centers holding over 3 months of inventory available for immediate delivery. Direct mill shipments of wide-flange shapes continue in the range of 12 to 14 weeks while HSS is available from producers in 4 to 6 weeks.

The transition from a domestically driven market for construction materials to a global market requires significant changes in how construction projects are managed. Early involvement of specialty contractors including structural steel fabricators during project design as a means of optimizing the material supply chain, as well as, the use of materials on the project

Engagement of product suppliers (mills and service centers) in early dialogue regarding pricing levels, material reservations and the availability of price lock mechanisms. Clear definition within bid solicitations of which party will be expected to hold the risk for material price fluctuations with the understanding that the assumption of that risk requires compensation. On some projects it may be acceptable to incorporate an escalation clause into the contract. Typical contractual language is available upon request from the AISC Steel Solutions Center (solutions@aisc.org)