Experts say that for 2008 the price of steel will remain unpredictable due to a supply crunch and cost increases. For the first two weeks of February, the price of hot rolled steel increased 6%, and Lehman Brothers analysts have predicted that worldwide steel prices will increase 25% in 2008. Unlike the US steel panic of 2004, when steel prices were only good for seven days, the current US steel shortages are regional, with only certain markets facing problems. China has recently complicated matters by placing an export tax on raw steel, a tax that has won over US steel producers and worried US manufacturers that rely on imported raw materials. US imports of steel were down 50% from 2006 to 2007. US steelmakers have slowed production and are currently shipping more raw materials overseas, where they can find higher prices. To offset the higher cost of steel, mills are expected to increase the prices of final products, with stainless steel products that would have sold for $19,000 in 2007, costing $26,000 today. Conversely, the value of scrap metal, which constitutes about 20% of every ton of steel used, has experienced a sharp increase and is selling for more than $400 per ton.

Source: Milwaukee Journal Sentinel