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METAL MASTERS UPDATE!
CHICAGO (Reuters) - An aerospace parts maker in California is struggling to procure cold-rolled steel, while an auto and appliance parts manufacturer in Indiana is unable to secure additional supplies of hot-rolled steel from mills.
An operator stacks a heavy gauge steel brace used for industrial workbench leg at Tennsco's factory in Dickson, Tennessee, U.S. February 17, 2021. Tennsco/Handout via REUTERS
Both companies and more are getting hit by a fresh round of disruption in the U.S. steel industry. Steel is in short supply in the United States and prices are surging. Unfilled orders for steel in the last quarter were at the highest level in five years, while inventories were near a 3-1/2-year low, according to data from the Census Bureau. The benchmark price for hot-rolled steel hit $1,176/ton this month, its highest level in at least 13 years.
Soaring prices are driving up costs and squeezing profits at steel-consuming manufacturers, provoking a new round of calls to end former President Donald Trump’s steel tariffs.
“Our members have been reporting that they have never seen such chaos in the steel market,” said Paul Nathanson, executive director at Coalition of American Metal Manufacturers and Users.
The group, which represents more than 30,000 companies in the manufacturing sector and downstream supply chains, this month asked President Joe Biden to terminate Trump’s metal tariffs.
Domestic steel mills that idled furnaces last year amid fears of a prolonged pandemic-induced economic downturn have been slow in ramping up production, despite a recovery in demand for cars and trucks, appliances, and other steel products. Capacity utilization rates at steel mills - a measure of how fully production capacity is being used – has moved up to 75% after falling to 56% in the second quarter of 2020 but is still way below 82% in last February.
Steel shipments are up, but still below last year’s levels.
A TIGHT STEEL MARKET
Steel producer Steel Dynamics last month said it can’t get enough flat-roll sheets even for its own internal operations.
“It is very frustrating,” said Hale Foote, president of California-based aerospace parts maker Scandic Springs. “I am looking at great business…but I don’t have any material supply.”
Scandic Springs faces the risk of losing a $1 million annual contract as it can’t find a domestic supplier ready to supply 240,000 pounds of cold-rolled steel.
Indiana-based Stone City Products, which supplies components to the appliance and automotive companies, is also hard-pressed to procure 2 million tons of hot-rolled steel a year for a new project.
The company has seen a dramatic turnaround in business after the pandemic lows in the second quarter of 2020 when orders plunged 50%. Its order book is now 25% above pre-pandemic levels.
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To keep up, it is running its factories seven days a week and has increased headcount by 40%. But steel that used to get delivered in eight weeks last year now takes 12-16 weeks. Mills are not accepting requests for additional purchases.
“We have been hand to mouth with a lot of customer requirements,” said Stewart Rariden, the company’s president.
LUCKY TO BREAK EVEN
Domestic steel prices have risen more than 160% since last August, leaving steel consumers in a quandary - whether to absorb or pass along the increased cost.
“We’ll be lucky if we break even at this price,” said Stuart Speyer, president at Tennessee-based Tennsco. Steel costs for the manufacturer of lockers, bookcases and cabinets are up 98% in the past six months.
Whirlpool last month said increased steel costs would shave 150 basis points from its profit this year. Farm equipment maker AGCO and crane maker Terex has announced price increases to offset material costs.
In its “flash” purchasing managers survey for February, IHS Markit’s prices paid index for factories was the highest since 2011 and its gauge of prices received for finished products was the highest since 2008.
The run-up in steel prices comes at a time when the expectation of additional fiscal stimulus and a faster vaccine rollout is fueling fears of widespread inflationary pressure.
However, policymakers like Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen do not foresee a prolonged and broad-based rise in prices anytime soon with U.S. unemployment still well above pre-pandemic levels and more than 18 million Americans drawing some form of government jobless benefit.
AMERICAN VERSUS IMPORTED STEEL
Record-high prices, meanwhile, are turning out to be a bonanza for steel producers. Shares of American steelmakers have gained 65% since last August. An analysis by rating agency Fitch shows U.S. steelmakers enjoyed a profit margin of 45% in January. Nucor expects to post the highest-ever first-quarter profit.
The steel industry and union groups last month urged Biden to keep the steel tariffs in place, calling them ‘essential’ to the domestic industry. Steel producers are facing their own higher costs following a rise in scrap and iron ore prices.
U.S. steel prices are 68% higher than the global market price and almost double China’s, even with prices in both China and Europe up over 80% from their pandemic-induced lows.
The price gap is so wide that even with a 25% tariff, it would be cheaper to import than buy from domestic mills. The United States imported 18% of its steel needs last year.
Logistical challenges, like container shortages, and thin overseas supply are keeping imports in check. But some distributors expect imports to pick up by June if the domestic market remains tight.
Uncertainty over the tariff outlook is one factor keeping the wraps on domestic steel output.
Angela Reed, an executive at Atlanta-based steel distributor Reibus International, says an expected review of the import restrictions is delaying a ramp-up in production and a build-up in inventories as easing of the curbs will likely drive down the domestic prices.
“(People) are trying to make sure that they don’t get hung with any of the higher-priced stuff,” Reed said.
39 YEARS IN BUSINESS
For over 38 years Metalmasters has been operating on Long Island. Our knowledge of the local and surrounding area's markets are unrivaled. Due to our years of loyal service to our customers, we have grown into the company we are today. Owning our fleet and having the "Decision Makers" right here in our office gives us the cutting edge ability to deliver products faster and at a more competitive price than larger "corporate" owned companies. The same values and dedication to excellence we started with over 38 years ago still stands strong today, and always will. That is our promise!
We have a broad and diverse range of metals and most of our sales staff have 20 - 30 years of experience each working with many different types of metals to provide you with the service and knowledge you're looking for!
We Run Our Own Fleet Of Trucks.
A WORD FROM OUR CUSTOMERS
As a third generation tin-knocker, this business is in my blood...both figuratively and literally. I can honestly say that after over 3 decades of being a customer, Metalmasters is a company that far surpasses so many others in this over saturated NY market. Rich, Rick and the entire team at Metalmasters spew integrity, honesty, reliability, flexibility and most importantly...knowledge. However, it is the side of laughter & sarcasm that comes with each order, that has made us friends. We proudly recommend them each and every chance we get!
ITP has been doing business with Metalmasters for many years. Rich & Rick have treated my company like family, we work together daily! The communication provided from Metalmasters is exactly what I need to run my company & have it perform the way it does. Both Rick & Rich have gone far & beyond to make business flow smoothly with excellent prices! To sum it up, doing what you're supposed to do goes a long way and that's exactly what Metalmasters does. Thank you from all of us at ITP.
As a Foreman for a large construction company, timing is everything. Being able to pick up the phone and speak directly to a person every time I call is a BLESSING! Rich and his staff are truly incredible. I know I can always count on them, they are on top of every detail and have first hand experience and knowledge of the industry. Metalmasters will always be go-to supplier!
We have been doing business with Metal Masters for over 20 years and we have never had any issues with product quality, deliveries or invoicing. They have also come to the rescue many times when we have a rush job with a special metal requirement! They are our "go-to" guys.
In English …
I am a long term customer with mastermaster, they have best customer service in steel industries . they can answer any question I asked. Very good price . Also, they have salesman who can speak Chinese . and early delivery, most of the time before I open.
For any inquiries, questions or Recommendations, please call: 631-737-1333 or fill out the following form.
2090 5th Avenue
Ronkonkoma, NY 11779
Toll free: 800-649-2208
Local phone: 631-737-1333
Fax number: 631-737-1177
Hours for pickup: 8:00 AM to 3:30 PM
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