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Steel subbies to pass on price rise to clients

MATERIAL - Fabricators say uncertainty over section prices means costs will be hard to absorb

STEEL subcontractors and fabricators will push price hikes on to customers in a bid to claw back profits, despite bulging order books.

Steel producers are set to raise prices by as much as £60 per tonne over the summer, with further hikes anticipated in October.

Fabricators have indicated that they may not be able to absorb the increases.

One south Yorkshire-based fabricator said: 'Our order books are full to bursting. We are taking work that will not come through for another six months but, because of the uncertainty over section prices we will find it difficult not to pass those costs on.' These bulging order books are partly to blame for the ballooning prices, according to Dr Derek Tordoff, director general at industry body the British Constructional Steelwork Association.

He said: 'Steel is the UK's favourite framing material and is fast becoming the first choice in the world. This strong demand, particularly in Europe, is one of the drivers behind the price increases.' The latest round of price hikes has forced the BCSA to revise its forecast for price inflation during 2006. The association is advising specifiers and contractors that prices will rise by up to 15 per cent by the end of 2006, up from its initial 5 per cent forecast at the beginning of the year.

But Dr Tordoff claimed the move would have little effect on the popularity of steel and argued that its traditionally lower price was not the main reason for steel's domination of the frame sector.

He said: 'Safety, reliability and sustainability are increasingly accepted as key issues in steel's favour. It is a modern and efficient material, fast and accurate to build with and represents best value for money.' And he warned that stockholders may raise prices by more than £60 per tonne in a bid to offset earlier hikes from production mills.

Steel prices are not expected to stabilise before the end of the year and the increases centre around raw material price hikes and higher energy costs.

Prices for iron ore have rocketed by 70 per cent over the past year, thanks to massive demand from China and India. A surge in construction activity in Europe is hoovering up any spare material.