Steel prices up, you pay more

Apr 1, 2004 12:00 PM, Wayne Wenzel

Perhaps you've noticed that the price of commodities has gone up in recent months. If you're talking corn and beans, that's good news for farmers. But if the commodity in question is steel, short-line equipment manufacturers in particular would like you to know that high steel prices are likely to increase the cost of your next planter, auger or wagon.

Steel mills throughout Canada and the U.S. announced price increases of $25/ton in January 2004, $55/ton in February and another $45/ton in March. Some steel companies are calling the increases “surcharges” and attribute the increase to soaring world demand for steel, especially in China.

North American manufacturers aren't likely to absorb the higher steel prices. But rather than simply raising product prices, equipment manufacturers associations say they are considering a recommendation that members pass on the price increase along with the term “steel surcharge” directly to equipment customers. The idea is to clarify the reason for the increase. This makes sense, although it is too bad that farmers can't pass costs like tech fees and steel surcharges directly on to grain buyers and consumers.