Steel pipe suppliers feeling effects of long winter

At least one steel pipe supplier is seeing negative effects from a long and harsh winter. Earnings in the second quarter of the fiscal year dropped and the spread between the selling prices of products and the cost of raw material narrowed. The decline in business can be attributed to winter conditions that stalled the production and the shipment of steel products.

 

Delayed production and problems with on-time delivery weren’t the only factors effecting steel pipe suppliers. They also had to deal with higher conversion costs and a much smaller spread between how much raw material costs and how much they were being sold for. Dealing with snow removal and additional heating costs for a prolonged winter can also add up.  The polar vortex of 2013/2014 that gripped most of the nation led to some preparation by manufactures and suppliers for this year’s winter, but in most cases everything is up to Mother Nature and the main focus turns to everyone’s safety in rough conditions.

                                                                                 

Luckily as the nation begins to thaw out and summer is within reach, companies effected by the cold are expecting a significant turnaround in the last six months of the fiscal year. The summer season creates a surge in demand for steel pipe and other steel products meaning most suppliers will be able to recover. However, to fully improve financial standings costs may need to be cut and facilities may need to be consolidated or closed. Operational volume may also need to be increased in order to achieve lower product costs.

As the industry approaches its peak season, it is important for suppliers and manufacturers to go back and review any policy and procedures in place for continuing operations during winter months, including the safety of those manufacturing the products and delivering them. Any adjustments should be made to ensure that customers’ needs are met efficiently, and with caution. Just because steel suppliers can’t control the weather doesn’t mean they can’t effectively prepare for it.