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Prices remain unpredictable.

Article Excerpt
Steel pricing, product shortages, the ability to pass along cost increases to downstream consumers and the fear that higher costs will further erode the U.S. manufacturing base topped the list of concerns among company representatives who spoke during a March 10 special hearing of the U.S. House Committee on Small Business.

Chicago's Trilla Steel Drum Corp. makes drums used to transport hazardous materials, food, and other products, from steel purchased from domestic mills.

During the special hearing, President and CEO Les Trilla testified that his company's steel supplier "informed us within the last three weeks that they will not honor quoted prices, but will determine the price of an order by the market price in effect [called PIE] at the time of shipment. Basically, they are rescinding all price agreements."

When his purchasing department quizzed the supplier on how they would determine this price at the time of shipment, the mill representative told Trilla Drum they did not yet have a system in place by which they could make daily pricing changes.

"We were paying $390 a ton in December, and we are now paying $530 a ton. We have been told to expect that steel prices will be in the $680 per ton range in April. The most recent spot price quotes I have received are for over $850 a ton--almost three times what I was paying five months ago. This is a seller's market like we've never seen before."

Such rapid price increases are "devastating to our business, which always runs on very tight margins, and where cold-rolled steel is our principal raw material," Trilla said, adding that steel makes up 60 to 70 percent of the company's production costs.

On the sell side, he said, "We have quoted prices to our customers and we must honor those prices." His only hope...

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