WHAT'S HOT

By Tom Stundza, Executive Editor -- Purchasing, 3/8/2001

Almost every day lately, another steel producer is trying to tell customers it wants to implement an energy surcharge to fight higher-than-expected costs for natural gas and electrical power.

Steel buyers rightly call this a thinly veiled attempt to increase prices during a period of depressed sales, and they say they won't pay the surcharge. The buyers already have beaten back a similar energy surcharge ploy by the aluminum mills. Analysts say a lack of demand for specialty steel will doom the energy surcharge attempt for a second time in that market.

And why shouldn't buyers resist energy surcharges? High natural gas and electricity fees are boosting their operating costs as well. "Everyone is having problems with energy costs," one big-tonnage buyer tells me. The price of energy directly impacts users' manufacturing costs.