The Rising Cost to Move Metal

The Rising Cost to Move Metal

You may find it difficult getting that next piece of 7075 aluminum or aluminum bar stock these days. The Midwest Premium (MWP), which the logistical surcharge for moving aluminum into the Midwest, remains near record highs, is hovering around $0.40/lb.

Couple this with the fact that the price of the material used for producing aluminum remains at record highs and what you have is a situation where the cost to acquire aluminum is higher than it has been in quite some time.

But logistical challenges aren’t unique to the aluminum market. Overall, capacity in the flatbed market remains flat in Houston , which is considered one of the largest markets for flatbed trucking in the country, according to DAT Freight & Analytics.

Higher truckload volumes on the busiest outbound lane in Houston dropped spot rates by $0.08/mile to $3.40/mile, according to DAT.

The price of diesel in Texas averaged $4.72/gallon on April 14, which is below the national average of $5.01/gallon.

Why Are Steel Prices Higher Again?

Just when you thought the price of carbon steel was moving off historical highs, March happened.

During this month, the price of hot-rolled carbon experienced its highest month-over-month increase in history. Sheet mills across the country announced price increases, totaling roughly $275/ton, while plate producers increased prices by $50/ton.

You could point to the tensions in Russia/Ukraine as one factor, although it’s not directly tied to the import of finished material. The U.S. imports only about 3% of material from this region. Instead, it’s more about the rising price of the ingredients used to make steel that is causing the increase.

For example, the price of busheling scrap, which is a key ingredient in making steel, is up nearly 48% year-over-year as of April 15.

Heard on the Street

According to data from the Dallas Fed, Texas factory activity increased at a solid pace in March. The production index for the month, which is a key measure of state manufacturing conditions, held mostly steady at 13.2. This indicates slightly above-average output growth.

But what are fabricators in Texas saying about conditions? According to the comments section of the report, respondents in this industry are pointing to supply-chain problems, inflation and the shortage of materials as limiting the number of projects that can be funded and built (particularly infrastructure projects).

For example, one respondent stated, “Requests for quotations have remained steady, but there is a slowdown on starts, reflecting uncertainty by owner companies.”

In honor of Earth Day this week, we present the Sustainable 7: Seven facts that make metal the most sustainable material on the planet.