You’ve seen a significant shift in pricing and availability if you have priced livestock equipment or any steel-based manufactured products over the last five years. To demystify the process and pricing of livestock equipment, we’ve put together the Top 5 things you need to know about how the Steel Industry market fluctuations affect farmers and ranchers.
HIGH DEMAND DURING PANDEMIC LEADS TO PRICE SPIKE
In August 2020, before the pandemic had begun to affect the global steel economy, raw steel was trading at around $80/ton. One year later, in September 2021, raw steel was trading at closer to $1950/ton. At over 2000% higher in just around one year, buyers and manufacturers feel the impact of this increase to a degree previously unimaginable.
PRODUCT ACQUISITION FOR MJE LIVESTOCK
There are a few different ways MJE Livestock Equipment purchases steel tubing for manufacturing the durable, high-quality fence, gates, and products customers have come to depend on in their livestock operations. American-made steel tubing is our preferred material.
BUYING POWER AND ACCESS TO MATERIALS
MJE, LLC has been building the world’s largest dairies and feedyards since the mid-1970s. During this time, we’ve defined ourselves as turnkey builders – which means we build everything ourselves. Without the reliance on outside producers to manufacture our gates, fencing, fence clips, chutes, and other steel products needed for creating a livestock operation, we’re able to keep our projects on OUR schedule and meet deadlines. In addition, this method of doing business gives MJE Livestock Equipment buying power.
PRICING CHALLENGES IN AN UNSTEADY MARKET
Manufacturers face a tough challenge throughout the ups and downs of the steel market and the overall wage increases needed for a steady workflow. We’ve spent decades building solid relationships with tube mills and steel warehouses, allowing us to get the best possible prices that we pass along to our MJE LE customers. Our pricing method is constantly evolving, and we spend hours calculating the best possible prices for our customers. We price our products using average vs. replacement costs in an unsteady market and always aim to give the best possible price to our customers. Bulk discounts are also available for large quantity purchases.
FORECAST FOR THE FUTURE
No one knows for sure what the steel markets will do. However, the steel market is seeing a softening in some areas that will start a trickle-down effect, eventually leading to lower prices for tube mills, steel warehouses, and manufacturers. We hope that once the price of steel comes down for our suppliers, MJE LE will be able to buy material at a more reasonable cost, and the market will stabilize. It took the marketing over a year to get where it is currently and will not fall as low as it started. None of the changes happen overnight. Not all steel prices are seeing a downward trend, and some steel (including plates, galvanized, cold roll, etc.) are still seeing increases.
The effect of the pandemic on the steel market has been significant. However, experience tells us that the markets have begun to stabilize, but the trickle-down nature of the stabilization will take a while to reach consumers. In the meantime, MJE Livestock Equipment will do our best to keep customers aware of the changes and prices accordingly.
Choose MJE Livestock Equipment as your partner in the industry to help you weather unpredictable markets. Check out what’s new on our product pages!