Steel drum tags start to rebound after tough year
By Staff -- Purchasing, 2/10/2000
The market for steel drums has been tough for producers in the past few years. Oversupply in the industry and stiff competition have led to low prices.Also, unfavorable economic conditions in Asia during the past two years have damped demand for U.S. exports. This has taken its toll on the steel container market.
But with economic recovery under way in the Far East, rising raw material prices for steel, and development of new products, some steel drum producers see higher prices and improved demand ahead. One producer estimates that demand will grow 2.5%-3% in 2000.
Because about 70% of steel drum makers' manufacturing costs come from cold-rolled steel, buyers should look to these raw material prices for indications of future price movements.
According to metals pricing data collected by Purchasing, cold-rolled steel averaged around $386/ton on the spot market in 1999. Purchasing predicts that annual average spot prices for cold rolled will rise to $433/ton in 2000 and $448/ton in 2001. "Prices are coming up, mainly due to the steel industry's curtailment of offshore steel entering the U.S. market," says one drum producer. "Less competition from overseas has allowed producers to improve their margins."
Product enhancements
With prices low in the past few years, producers have been busy making product enhancements and services to add value for bulk-packaging buyers.
Jim Heffernan, director of marketing at Trilla, based in Chicago, Ill., says, "For the industry as a whole, manufacturing processes for steel drums have seen some major improvements in the past few years. Manufacturers are developing steel drum products made of lighter-gauge steel, which, from a cost perspective, are designed to compete with the variety of plastic containers on the market."
Also, due to the advent of more stringent environmental regulations, steel drum producers are coming up with more analytical testing measures. For instance, some steel drum manufacturers, such as Grief Bros., now conduct helium testing procedures on steel drums to guard against product leakage.
Another product innovation is the development of the W-Hoop top design, says Scott Marple, steel drum product manager at Grief Bros. "W-Hoop tops for steel containers are a growing trend because they allow for more efficient stacking of steel drums on standard pallets," he says. "This helps customers reduce shipping costs."
Major producers of steel drums in the U.S. include Russell-Stanley, Van Leer Containers, Grief Bros. and Trilla Steel Drum.
Steel drums continue to be a mainstay in bulk packaging, especially because of their material strength and flexibility in the number and types of products they may contain. Also, due to their standardization of design, steel drums allow for easy transportation and may be used with flammable and some hazardous materials.
Steel drums can be recycled, reused and reconditioned. There is a strong market for steel container reconditioners in the U.S., and in fact, all major steel drum manufacturers offer drum reuse, reconditioning or recycling services to their customers.
There is also a strong market for steel scrap to be melted down and remade into new steel. Only a small percentage of steel drums manufactured are not collected and reused or recycled.
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