The prices of raw materials that we track rose substantially this year!

  • Aluminum  up 44% from Dec 2008.
  • Copper up 112% from Dec 2008
  • Nickel up 27% from Dec 2008
  • Steel busheling up 35% from Dec 2008
  • China coke up 60% from Dec 2008

We expect to see continued incidents of shortages, material unavailability, and skyrocketing surcharges and price increases until the supply lines are filled.
Here is link to PMPA’s Material Impacts Report for year end 2009.
Last year taught us 2 economics lessons:

  1. It doesn’t matter how many parts your machines can supply. Orders are based on DEMAND.
  2. Prices for raw materials inevitably go up when there is no SUPPLY available.

Remember those the next time your customer tells you they want a fixed price or a mandatory discount.
For more on Supply and Demand:

Well, maybe the demand we’re talking about is a wee bit different…

Cartoon Credit.


We expect to see steel surcharges and prices on the climb as manufacturing economic activity starts to recover. The current 2.8 times increase for the scrap surcharge compared to June  does not bode well for moderation in increases going forward.

Steel bars pointed in preparation for precision machining. miles
Steel bars pointed in preparation for precision machining

The scrap surcharge for August 2009 was announced to be $7.00 by Republic Engineered Products.  The scrap surcharge for carbon and alloy steel cold finshed bars was $2.50 per hundred weight (cwt) when we prepared the June Materials Impact Report.
US raw steel production is up slightly at ~3% over prior week according to AISI.  Exports to Turkey and lack of manufacturing activity in North America to generate new scrap are possible factors.
Chinese steel production has been on a tear- up 10% in June according to various press reports.