Here’s one that hits close to home: J.S. Alberici, the second-largest contractor in the St. Louis market (annual revenue of over half a billion dollars), has been bumped from the new Cardinals stadium project because it tried to renegotiate the contract over rising steel prices.
Hunt Construction Co., the general contractor, gave the Cardinals a guaranteed price of $274 million when it took the job. When Alberici asked for an extra million over its $25 million contract for structural steel, Hunt gave the package to a company from San Angelo, Texas.
The price of steel has risen about 30% over the last few months. One construction estimator in town says he expects material costs to increase 10 to 15 percent a month for the next six or seven months. Buyers say the total price of hot-rolled steel sheet could hit $600 a ton by next month. That’s up from $350 a ton in January.
We’re seeing this rapid cost inflation in the steel pipe business, as I’ve mentioned before. US Steel’s pipe division has raised their prices about 20% in the last two weeks, and a couple of our major mill suppliers have stopped quoting prices altogether until things settle down.
Where is it all going? China, apparently. The Chinese economy used 250 million tons of steel last year, more than the US and Japan combined, and it’s expected to suck up even more this year.
Sooner or later, this will rise up and smack consumers in the face. How long will the government claim that inflation is not a factor in our economy?