Steel Prices Rise

By Angela Kennecke
Published: February 1, 2011, 9:50 PM

UX FALLS, SD - You may not think of Sioux Falls as being part of the global economy. But when you look at the price of steel, you'll find that KELOLAND is directly tied to what's going on around the world. 

Sioux Steel in Sioux Falls makes grain bins and storage systems and a host of other agriculture equipment made out of steel. The cost of the raw material has taken a sudden jump. 

"I think we're going to see anywhere from 10 to possibly 20 and 30 percent increases depending on how situation in US plays out to the world. 70 percent of coking coal is in Australia. You've heard about flooding in Australia, so you know there's been damage to mines and infrastructure there and that has a lot to do with what we do here today," Sioux Steel CEO Scott Rysdon said. 

When it comes to steel, the market is affected by supply and demand and that demand is at an all-time high in China. 

It's a world market. China was pulling in a lot of Australian demand with contracts. If that slows, with their economy almost being a double digit growth every year, has got to expand. And that makes it difficult so they have to look for other places. It puts pressure on supply and demand of iron ore and coking coal," Rysdon said. 

That means farmers will pay more for building grain storage this year, but Rysdon expects plenty of business for Sioux Steel anyway. 

"We're at the tightest stocks of grain we've been in last 20 years. We've got some huge opportunities for farmers to get storage early, get it now, and get it put up. They'll be paid handsomely for that crop," Rysdon said. 

Car manufacturers are the biggest users of steel and while car production numbers are down, Rysdon says steel plants cut back on production to manipulate the market and keep demand high.