Dear Bond Products customers,
2020 has been a year full of unexpected challenges for all of us. Unfortunately, there are several more that are currently occurring throughout the world that will have an effect on the prices and availability of our products. We wanted to give an explanation of what the factors behind these are, including shipping challenges and higher steel prices. This may help you understand any changes we have to make going forward.
Steel Scrap Prices
Over the past several months, forecast steel scrap prices for December have increased from $15/20 per ton of scrap to $80-$100 per ton or higher. The COVID-19 pandemic has already greatly disrupted the supply chain for steel and wire products around the world. Labor and raw material shortages also complicate this problem. At least in the short term we are looking at much higher prices for steel which will affect the price of finished goods in ways we can’t fully predict.
Another problem that American companies face is shipping challenges out of China. Currently there is a global shortage of shipping containers due to a lopsided trade balance with China and the delays of shippers in returning containers because of the coronavirus. There are almost 180 millions shipping containers across the world. These are used to move 60% of global goods. Without containers, nothing can ship and goods remain in port waiting to be shipped.
Steady demand for products coupled with a lack of shipping options means that cargo costs are skyrocketing. This affects both retailers and manufacturers nationwide. The cost to store any waiting goods in warehouses will also add to shipping costs and costs to the consumer here.
Right now shipping lines have announced that they are temporarily suspending cargo bookings into South China as well beginning in early January and extending perhaps until the end of February of 2021. COVID-19 has affected shippers due to quarantine rules for ship crews.
The ongoing COVID-19 situation is beginning to be characterized as a force majeure event which is an event that is large enough to be beyond the control of individual manufacturers or even countries. There are provisions in contracts for force majeure events. Typically they nullify obligations for the duration of the event – which is a fancy way of saying that people cannot be held to the old rules when the game has completely and unexpectedly changed.
We are looking at higher freight rates, higher prices on goods made of steel, and unpredictable shipping of goods. That is in addition to any challenges we face in the United States and in the state of Pennsylvania. Please know that Bond Products is working hard to keep our products available to you, our customers, at affordable prices. We will continue to serve you as best we can during this pandemic and beyond.
If you have any questions, please feel free, as always, to contact our customer service representatives at 1-888-800-BOND. They will be happy to assist you.