Steel and Aluminum Tariffs Impact HVAC Industry
Effective in May of this year, the U.S. enacted trade tariffs of 25% on steel and 10% on aluminum. The effect has been a changing market. Steel prices are up 60% from a market low set late last year.
U.S. steel producers have lobbied for years for government intervention, pointing out that international dumping of steel, especially by China, has decimated the American steel industry.
While the Administration initially provided temporary exemptions to Canada, Mexico, and the EU, those exemptions were revoked on June 1.
In the wake of these developments, buyers have been reluctant to place foreign orders with long lead times, uncertain of how the developing situation may shake out. With less foreign competition, domestic producers have already been able to increase prices, in some cases dramatically. Less competition also means less supply, with lead times from U.S. suppliers often doubling overnight.
Faced with increased orders, U.S. Steel has decided to restart two steel blast furnaces at its Granite City facility in Illinois. Republic Steel, Liberty Steel, and others are taking similar actions.
Even so, many buyers have decided to pay the imposed duties rather than risk an interruption in supply.
What is the Bottom Line for HVAC?
Supplies of sheet metal may get tight in the fourth quarter of 2018. Keep in touch with your suppliers and be aware that prices may continue to rise. The good news is that the housing and construction market is strong this year.
Residential housing is expected to grow between 6 and 9%. New commercial office space may also reach 6%.
At The Cincinnatus Group, we have our finger on the pulse of the sheet metal market. Call us today at 878-295-8009 to speak with an HVAC ductwork specialist about your project.
To learn more, we recommend the following articles:
From SNIPS: Steel tariffs may continue impacting sheet metal products
From ACHR News: Steel and Aluminum Tariffs Will Have Immediate Impact on HVAC Industry
From Building Solutions: The 2018 Construction Forecast Report is Here
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