Steel prices on the decline since January

Prices for structural steel have fallen nearly 20 percent – more than $100 per ton – since January.

Steel prices, which shot up about 30 percent in early 2004 because of a devalued U.S. dollar and high prices for scrap materials, have been weakening in response to lower scrap prices, inventory glut at warehouses and an increase in Chinese steel production.

The drop in the price of steel won’t impact two of the area’s largest construction projects, though.

Kevin Twohig, executive director of the Spokane Public Facilities District, said bids for steel to be used in the Spokane Convention Center expansion, slated to open in January 2007, went out in October.

“We essentially bid all our prices at what it was at that point, so we can’t go back and re-bid it,” Twohig said.

Twohig said more than half of the 1,300 tons of structural steel and 2,000 tons of reinforced steel has already been erected.

“You can’t stop in the middle of that and say ‘Hang on, we want a new price,’” he said.

Gregory Brown, director of capital projects for Spokane Public Schools, said he hadn’t heard about the decrease in the price of structural steel, but said it won’t affect school-construction projects the district bid on last spring. Those projects, which started Monday, include construction of replacement buildings for Lincoln Heights, Lidgerwood and Ridgeview elementary schools.

“Normally, the contractors won’t come back to you and say ‘Hey we’ve got a really good price on steel, and we want to give you some money back,’” he said.

However, Brown said the price decrease might affect the district’s decision to pre-bid steel and rebar for future projects, such as repair work and construction at North Central High School and several other elementary schools.

Brown said big projects such as the construction of a school usually take 18 months to two years.

“We do have the option of putting some of the bid projects out earlier than others,” he said. “It’ll certainly help us out on future projects.”

Brown said the district shuffled budgets to make sure it could complete projects following the steel price increases of early 2004.

“We saw our project costs rise 15 to 20 percent,” he said. “Steel kind of rippled through; other materials became in short supply, so those items got impacted as well. Hopefully, with the steel prices going down, other materials will too.”

Todd Weaver, president of Metals Fabrication Co. in Airway Heights, said he heard rumors of a price drop several months ago and adjusted some bids accordingly, but was locked in to others.

“We had enough of a feeling from the sales reps and from warehouses that there was a drop coming, so we went ahead and took a chance on some bids,” Weaver said.

Weaver said when steel prices increased in early 2004, there was a shift by engineers to use concrete for many construction projects.

“Now you have a yo-yo going back the other way,” he said.

However, he said the effects of the price decrease in steel have been slightly muted by increases tacked onto truck and rail shipping by steel mills.

“It’s like when one thing goes down, another goes up,” he said.

Bill Savitz, president and CEO of Garco Building Systems in Airway Heights, shared similar sentiments but said the decrease hasn’t affected his company because of the types of steel it buys.

“It really hasn’t hit us yet,” he said. “The materials we buy have not necessarily seen a 20 percent decrease in price.”

Garco makes pre-engineered metal buildings and purchases steel plate, bars and coil.