When is the Best Time to Lock In Your Steel Price?
Supply and demand. It’s the most important determination of microeconomics and it’s the backbone of macroeconomics. Supply and demand says that a price for a particular good will vary until it settles at a point where the quantity demanded by consumers will equal the quantity supplied by producers. Think about it this way: Supply is how much of something is available, while demand is how much of something people want.
Let’s get down to the ‘nitty gritty,’ and how supply and demand factors in determining your steel price. Of course, you want to get the most bang for your buck if you decide to invest in a building of any kind. Like gas and oil, steel is also a commodity that undergoes price fluctuations. And like any commodity, those prices are affected by supply and demand. Just like that, we’ve gone full circle.
As a consumer, you’re familiar with the increases and decrease of oil and gas prices, because you see them everyday. But steel prices aren’t front-page news. Natural disasters, labor disputes and seasonal or large project demands of the construction industry might not automatically trigger a response much like the feeling you get when you pass a gas station, and see the price jump 10 cents in 4 hours. But it still happens everyday, whether you are aware of it or not.
While the cost of steel as a commodity will continue to fluctuate, the price of finished steel will always rise. That’s because plant workers and fabricators need to be paid. Most of the time, labor rates won’t drop. So as finished steel (used in steel buildings) is produced, you can count on the price increasing as time goes on. Recently we had a drop in gas prices across the country. That drop also influenced steel. Change in the price of gas made it cheaper to transport the finished and fabricated steel to and from facilities, and to and from customers looking to build. Now, it’s true there will be minor fluctuations in finished steel, but typically, you can count on the price rising over time.
So when is the best time to lock in your steel price? Right now. As a matter of fact, the price is unlikely to ever be less expensive than it is now.
Locking in your price at the right time is extremely important. With a small engineering payment, you essentially get to conquer supply and demand. This engineering payment accomplishes a few tasks. First, it guarantees that the price of the steel used in your building will hold firm for a period of 90 days, even if prices rise. The price of steel that day is the price you’ll pay, no matter how big or small your building is. It cushions you from the volatile steel market, and you won’t have to worry about price increases. Remember, since the cost of the finished steel is constantly rising, every day you don’t lock in your steel price, you risk an increase in price per pound.
Second, locking in your steel price will get your project started! Once you make the engineering deposit, your project is ready to hit the desk of an engineer and project manager!
You might wonder why we need to charge you an engineering payment. While not exactly similar, the small payment acts kind of like a down payment on a house. This is a non-refundable expense that goes towards the total purchase price of the building, and secures your steel price. But it does so much more than a down payment does. Not only is it a guarantee to get your project started, or a guarantee for a secure steel price across the board, but it’s also a covenant from our engineers. They’ll begin work on your dream building drawings and blueprints in our in-house engineering department as soon as it’s received.
Once you have your drawings, you can obtain a loan from your bank if necessary. For reference, don’t pour your foundation or try and get a permit before you have your preliminary drawings. It’s a huge blunder!
Steel prices are subject to change as quickly as the weather changes. Not that they will, but contractors may need to adjust their quotes with little notice. Not every steel building provider is able to offer a price lock option. Don’t be subject to unnecessary price increases in the beginning of a steel building project. We’ve all heard the phrase, “Time is money,” and with your steel price frozen, it will seem like time – and money – is frozen.
Lock in your steel price today. Because of supply and demand, changing construction seasons, or situations in the marketplace, the price of steel could go up, and probably will go up tomorrow. But you have the opportunity to beat the system. What are you waiting for?Photo courtesy: BrooklynJohn, James Case