[TheForge] RE: Tool Steel

Tue Dec 26 14:45:54 EST 2006

Stephen,

I spend 32 years as an engineer in the basic metals industry (in my case 
aluminum, alumiini, or aluminium to you) but factors effecting the price of 
basic metals are the same whether steel, aluminum or copper.  At the end of 
the day it is really what is the demand and how large is the supply.  But it 
is not quite that simple.  Energy prices are a big factor, in the case of 
steel, the price of coal / coke and the price of electricity.  But even if 
the price of energy is high, if you can't sell it at a price to cover the 
cost of energy you can do one of two things sell below cost or shut down and 
don't sell at all.

Now cost is not so simple -- you have two ways to look at cost -- full cost 
which includes your cash cost plus investment cost plus profit.  When demand 
is high, as it currently is world wide then you get to charge full cost.  As 
demand starts to drop, then you loose the profit piece, but you still pay 
your investment cost.  (The huge capital it took you to build a steel mill.) 
As demand drops more, you cover just cash costs -- wages, energy, raw 
material.  As buyers of steel we like this last case, except then mills 
close, supply drops, demand rises and so does price.  Price rises enough and 
someone builds new plants.  On and on in an endless cycle -- in the aluminum 
industry we used to say during you working years you would go through at 
least 7 boom to bust cycles.  And yes some folks get very rich in the good 
years, and some really loose their butt in the bad years.  Staying in 
business means finding a balance, which includes not charging too much in 
the good times -- or someone will build a new (and often better) plant and 
force an over supply.

Hope this makes some sense.  (I also know that we will hear from some folks 
on theforge that think this is all just "fixed" but it isn't.  Yes from time 
to time there are some bad actors such as ENRON, in energy, but in the end 
most if not all of these will fail -- but they do cause much pain in the 
process.)

Dave Smucker

----- Original Message ----- 
From: "Stephen Viola" <wombatforge at gmail.com>
To: <artgawk at thegrid.net>; "Sponsored by ABANA" <theforge at mailman.qth.net>
Sent: Tuesday, December 26, 2006 10:21 AM
Subject: Re: [TheForge] RE: Tool Steel

> Yeah it seems that both steel and coal have decided to take a hike
> through the roof.. not sure why.. due to oil prices or what??? if not
> it is always easy to blame it on oil anyway!
> I'm not that much of a market follower so I have no real idea why the
> prices are escalating.
> Can anyone shed some light on that?
>
> Stephen
>
> On 24/12/06, Peter Fels And Phoebe Palmer <artgawk at thegrid.net> wrote:
>> It's sorta academic Stephen...we all pay what we have to. The era
>> of lovely cheap steel seems to be long gone.
>> Last time i bought a decent quantity of stock steel it was less
>> than that by about 20%. That supplier doesn't know that anything
>> other than A36 exists. Buy a small quantity and pay through the
>> proverbial nose....pf
>>
>> Stephen Viola wrote:
>> > Hi all.. with all this talk about metal suppliers it got me to
>> > thinking about a price comparison. Through the college I study at we
>> > tend to convert everything into a kilo price except for pipe/tubing.
>> > On average I'd say I pay about €1 per kilo of construction steel. Of
>> > course the prices change as soon as you are looking at alloyed /
>> > carbon steels. But how does this price compare with you guys?
>> >
>> > Stephen
>> >
>> > On 23/12/06, Chuck Robinson <robi5515 at bellsouth.net> wrote:
>> >> Thanks everyone for your recommendations i'm checking them all out.
>> >> Chuck
>> >> ----- Original Message -----
>> >> From: "Bob Ehrenberger" <eforge at centurytel.net>
>> >> To: "theforge" <theforge at mailman.qth.net>
>> >> Sent: Friday, December 22, 2006 7:54 AM
>> >> Subject: [TheForge] RE: Tool Steel
>> >>
>> >>
>> >> > Chuck,
>> >> >
>> >> > We get our tool steel from Admeral Steel in Chicago.
>> >> > They will work with you and don't mind small orders.
>> >> >
>> >> > Robert Ehrenberger
>> >> > Shelbyville, Mo.
>> >> > eforge at centurytel.net
>> >> >
>> >> > ----Original Message----
>> >> > Date: Thu, 21 Dec 2006 10:47:15 -0600
>> >> > From: "Chuck Robinson" <robi5515 at bellsouth.net>
>> >> > Subject: [TheForge] Tool steel source
>> >> >
>> >> > I need a source or sources for round and square stock  W-1 and H-13 
>> >> > in
>> >> > small
>> >> > quantities. The GCBA conference in February is featuring Frank
>> >> Turley as
>> >> > the
>> >> > main demonstrator and he requires them for his demo.
>> >> > Chuck
>> >> >
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