MOULTRIE -- A spike in steel prices is driving right through the financial heart of local contractors and is worrying economic developers.

At 2 p.m. today, the House Small Business Committee will hold a hearing to investigate the recent dramatic surge in prices for steel and other metals and how those cost increases are hurting small manufacturers and threatening job creation in America, the committee Web site said.

President Bush lifted steel tariffs in December, expecting to trigger a drop in prices for U.S. manufacturers. Domestic manufacturers had experienced up to 50-percent cost increases during the 18-month tariff period. Instead, those prices have surged since the tariffs were rescinded, the Web site said.

According to one industry source, scrap steel was selling for $100 to $120 a ton at the end of 2003. In January, it spiked to $210 a ton and is likely to increase another $50 to $60 by the end of February. The prices of nickel, copper and aluminum have experienced similar recent hikes, it said.

"These recent dramatic price surges in steel and other metals are pummeling our small manufacturers who are trying desperately to hold on to their businesses," Committee Chairman Don Manzullo has said. "The lifting of the steel tariffs should have provided relief to these small business owners. Instead, the opposite has occurred. They are now faced with even higher prices. We must get to the bottom of these price surges quickly. Our economic recovery and thousands of American jobs are at stake."

Darrell Moore, executive director of the Moultrie-Colquitt County Economic Development Authority, is concerned that rising costs will delay current and potential projects or stop construction altogether.

Tyson Steel Building Products of Doerun just bid out the construction of a metal building for incoming precision metal working plant Milac Manufacturing, Inc. which is expected to create 25 jobs within the first year.

Prices had been level for a couple of years before January, when Tyson Steel began paying nine percent more for steel, Manager James Bozeman said. Days ago, local manufacturers were quoted prices 34 percent higher for structural steel products. Prices are expected to leap another 36 percent come April. All non-structural products increased 14 to 15 percent and are expected to climb another 21 percent.

Bozeman's supplier told him to anticipate more price increases in May, he said.

Tyson Steel and other contractors are forced to cancel contracts and rebid the work.

"There's no negotiations or nothing. Either you pay it or you don't get the material. So, we have to pass this on to our customers," he said.

The Emergency Steel Scrap Coalition attributes the unprecedented surge in U.S. steel scrap prices and its dwindling domestic supply to the sharp increase in steel scrap exports, particularly to China. In the U.S., steel scrap was selling for $150 per ton, but in China exporters can sell it for $450 per ton, Bozeman said. Plus, there's a shortage of coke used as fuel for blast furnaces in steel production, which further impacts supply.

Prices for U.S. No. 1 heavy melt scrap (an industry bellwether) have more than doubled, coalition representatives said, rising from $77 per ton in early 2001 to $156 per ton in December 2003. More ominously, they said, current spot market prices are skyrocketing. U.S. No. 1 heavy melt scrap has sold for prices as high as $300 per ton -- levels that are unprecedented, they said. Increasing prices for steel scrap results in sharply higher prices for steel products such as sheet steel, plate, structural steel beams, reinforcing bar and finished bar products, they said.

"Somebody had better do something," said Ray Bryant, owner of BMC Contracting, Inc. in Norman Park, proposing a cap on price increases.

China has major construction going on, Bryant said, including four large airports. China is also draining the supply of U.S. concrete, importing about half right now, he said.

BMC's supplier just cut its quota in half.

"We're hunting steel from wherever we can right now. Where I had been dealing with two or three companies, I'm bringing about eight or 10 out of the woodwork right now trying to get what I can get my hands on," Bryant said.

"Where a building cost $10,000 to build last month, you're going to pay $14,000 this month," he said, adding quotes are only good for four days, prices are increasing so fast. "We're having to cancel quotes. People are having to go back to the drawing boards."

BMC has a state contract to build an educational facility in Thomasville. The steel price surge tacked on an extra $108,000 to the project, he said. His costs are absorbed by the state, but taxpayers are then bearing the brunt, he said.

Bryant employs 107 people.

"They just don't know what's fixing to happen. They're hearing it, but they don't really understand it," he said, adding he hopes he won't have any layoffs since he has six months' worth of work ahead of him.

Still, he doesn't have the steel in hand.

"That's going to be the clincher," he said. "If we don't get allocated that steel, then these crews are going to be out of work."

"It's going to hurt a lot of people," Bozeman said. "I've got nine crews putting up buildings for me, and if I were to shut down two crews, you look at the families that are going to go lacking. It's really bothering me. I don't know where it 's going to go."



To contact reporter Lori Glenn, call 985-4545, ext. 224.

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