PIPES, VALVES, DUCTWORK AND GRILLES
Supply and demand
Malcolm Moss, president of ADCAS, examines the factors that have left the UK teetering on the brink of another full-blown steel crisis and explains why the ductwork industry is struggling to secure reliable supply lines.
ust a few years on from the near devasting events of 2015/16, the UK steel industry looks to be sailing headlong into another perfect storm – one that could prove fatal for UK businesses that require a steady flow of high quality and fairly priced steel in order to keep production lines running.
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Britain’s steel industry, already a shadow of its former self, had shown signs of recovery following the mass closures and mothballing of plants back in 2015, but the dumping of cheap Chinese steel on the EU market and the introduction of US trade tariffs seems certain to bring about another prolonged period of instability. Although anti-dumping duties are now firmly in place, if steel prices in the UK continue to rise and steel from China remains at a lower level, there is the potential for Chinese material to be competitive even with a 25% duty applied.
Steel coating
Worldwide demand for steel remains high and, in the UK, galvanised steel prices for the ductwork sector have increased 20% in the last year, over 30% in the last two years and over 60% since 2015. An influx of cheap Chinese steel may force inflated prices down, but quality and availability of specialist forms of steel remains a major issue for a lot of UK firms.
140g/m2 galvanised steel coating has become the norm across Europe and Asia. Obtaining 275g from China is increasingly difficult and leads to suppliers risking supplying 140g as 275g, hoping they are not found out. Most ductwork contractors are unable to check the coating weight even though the equipment enabling this is relatively low cost.
Not only is this an issue for ductwork manufacturers, but also producers of items such
42 October 2018
as access doors. In some cases, imports from Europe and Asia can have coating weights as low as 80g which will corrode three times as fast as 275g coatings in the same environment. Because manufacturers of components such as ductwork jointing systems, channel support profiles or items such as spiral ducts and fittings are unlikely to know at the time of supply where the duct will ultimately be installed, they use 275g to be safe.
However, DW144 – the specification for sheet metal ductwork – states that 140g is acceptable for corrosion category ‘low’ as deemed by the Institute of Corrosion, with other coating weights being considered by the designer, dependent on application.
It also states that all uninsulated external applications must be at least 275g. This leads to confusion and allows companies to claim that they conform to DW144 by using a 140g coating, stating that it is not their problem if the customer installs 140g on a project or location where it should have been 275g or higher.
With the UK galvanising line that turned black steel into galvanised steel now mothballed, the one remaining operational galvanising line is set up to cater to the high strength steel market rather than markets such as the ductwork sector, where margins were deemed too low – a decision that appears questionable following price increases.
Steel service centres in the UK have been left with little choice but to source the commodity from overseas territories. The issue is further compounded by the fact that other steel producing nations such as India, South Korea and Vietnam are unable to guarantee a consistent supply line, forcing purchasers to bring in smaller amounts from a raft of independent sources.
Knock on effect
There are no real winners in a volatile steel market but contractors are perhaps more vulnerable than most. Original project costings are calculated with a certain price in mind, possibly with a percentage buffer to guard against unexpected rises, but when the manufacturer is forced to pay more in raw materials costs then they have no choice but to pass some of the cost on to the buyer, eroding contractor profit margins and damaging livelihoods.
In a construction industry already feeling the pinch following the collapse of Carillion, seemingly minor changes to the landscape can have a major impact.
UK industry relies on high specification steel and the sad reality is that we are now unable to cater to UK market demands, leaving our manufacturers and contractors at the mercy of a wildly unpredictable and politically charged global market.
It is not clear whether there will be sufficient tariff-free material available from the Eurozone, and without wholesale changes the UK steel industry will continue to fester, unable to satisfy an increasingly exposed domestic market or compete on the world stage.
There is no quick fix, but over the long-term a more focused approach could potentially revive the local market, with efficient, smaller-scale production lines providing some much-needed stability and shoring up key supply lines for UK construction.
Unless there is a radical change in approach then high-volume purchasers from the UK, such as major ductwork manufacturers, will struggle to bring in the quality steel they need to satisfy the market, potentially putting current and future projects at risk.
www.acr-news.com
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