Stainless Steel prices to rise with Nickle increases

[brian eiland]

9/1/2006

Marine hardware manufacturers are feeling the effects of the rising cost for nickel alloys, a primary component of stainless steel.

Nickel prices have more than doubled since September 2005, from $7 a pound last year to almost $15 a pound today, according to http://www.metalprices.com/, an industry Web site that tracks prices on the London Metal Exchange.

A drawdown in nickel inventories has raised the price of some stainless steel products by 15 percent to 18 percent from the past year, according to one hardware manufacturer. Stainless steel is commonly used in everything from propellers to hardware to steering wheels.

“The majority of boats in the industry could not be put together without stainless steel,” says Matt Bridgewater, president of Gem Products, a marine hardware manufacturer based in Orange Park, Fla. “This is going to affect everybody.”

Prices for some grades of stainless steel have risen even higher. Molybdenum, a type of stainless steel with higher nickel content than generic blends, increased from $4 a pound in 2004 to more than $24 a pound today, according to John Pugh, president and owner of Marine Hardware in Redmond, Wash.

Pugh says the problem isn’t with just nickel. He said prices for all metals have risen in recent years. Stainless steel products went up last year, too, but he said that got lost in the copper increases. This year, it’s nickel prices that have “skyrocketed,” he said.

“All of the metal parts on entry-level boats to superyachts are going to have a 20-percent increase in costs this year,” said Pugh.

Bridgewater says there’s no way hardware manufacturers can absorb those increases. They’re going to have to pass on the higher costs to boatbuilders. He says that makes it tough for builders who already took orders at their recent dealer meetings.

What makes things even tougher, he continued, is that hardware manufacturers can’t get fixed pricing on stainless steel for more than 30 days out. They used to be able to lock in prices for a year. One vendor he spoke with said stainless steel shipments are delayed for about six weeks, and prices are subject to change at the time of delivery.

“They’re moving to a quotation system at the time of shipment,” Bridgewater said.

Pugh said hardware manufacturers can insulate themselves, somewhat, by buying metal futures or stocking up on materials. However, that would require a commitment from the boatbuilder to purchase a certain amount of products.

“The most anyone can do is lock in the price for one model year,” he said.

As for the delays in stainless steel shipments, he said, “You can always buy your way to the front of the line.”

In the long run, however, Pugh said the marine industry may have to consider alternative materials for some boat components, such as more sophisticated plastics.

“The price of metal used to be pretty cheap as far as the cost of a boat,” he said. “Now we may have to go back and analyze ways to reduce metal and lighten the boat. All of the boatbuilders are coming to us, saying we need price reductions.”

Bridgewater said he expects nickel prices to level off as supplies increase to match demand. However, he said that may not happen until the middle of next year.

— Melanie Winters

m.winters@tradeonlytoday.com

[D'ARTOIS]

We may expect in the next decade an all over shortage of all sorts of metals, even steel caused by the growing industrial development of countries like China and India. There demand for raw materialis almost beyond expectation.
Then we have the US defenceindustry that takes all excotic materials out of the market, as well as the aluminium for the aircraft industry.

[hansp77]

We can try to keep politics out of boat design...
but we can't keep boat design out of politics...
or something like that.