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Why Does Steel Cost More Than Finished Parts

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Robert LaLonde

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#1
Seriously. Why?
 

kd4gij

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#3
because you aren't buying 10,000 lbs. of steel at a time
 
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#4
The big production shops purchase their raw materials by the truck load when they can as it saves them LOTS of money. When they purchase that much it gets drop shipped directly to the customer instead of going from the mill to the distributor first, which saves cost in both transportation and handling.

Purchasing 10,000 pounds at a time gets them a break too, but nothing like buying 50,000 pounds at a time.
 

AGCB97

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#5
Here ther's quite a bit of new stock if you're close enough. CR and TGP shaft $1/lb., HR$.40/lb.
 

JPigg55

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#6
I understand the huge volume buying discount, but it sure is harder to understand how they can buy the material, produce & package the product, ship it from China, truck it to wholesalers & then retailers across the country and then have a price lower than we can buy the material to make it.
 

mcostello

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#7
Government subsidies, a giant Ponzi scheme. Trouble the chickens always come home to roost. What goes around always flies around.
 

Cactus Farmer

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#8
Slave labor help the Chinese a lot.
 

RandyWilson

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#9
Another thing that helps is not being encumbered with an obsolete distribution system with a top heavy sales department pocketing $20 on your "$5" order.
 
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#10
Slave labor help the Chinese a lot.
There is no slave labor in China anymore. My first trip to China in 2005, I did go into a shop where was some 14 year old girls doing needlework on canvas. They were getting paid about 25 cents an hour to our standard, but fro them, that was privileged to make that kind of money. They only worked about 4 hours a day. Just like over here, they went to school during the day.

I've witness manufacturing over in China. People may only get paid a $1.00 per hour, to many that's a lot! Realistically, a real good machinist over there makes about $1.75- 2.75 an hour. Their standard of living is gradually catching up with the rest of the world.

The steel market is caught up with ours somewhat. The cost of steel of steel over there is about 25-35% less in price. Quality of their steel is equivalent to ours, but the selection of sizes varies and one size you get this time, you may not get the next time you want it. Since steel has become a global commodity today, they import just as much steel as they export, too. And this does not apply to them only. There are many steel mills located world wide that produce for global sourcing and a lot of it comes to USA, too.
 

Holescreek

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#11
Because you buy your steel in the wrong places.

Look for steel and aluminum recyclers within a range of miles you are willing to drive. Steel at my local recycling yard is 45 cents/lb and across the street aluminum is $1.25/lb. Many of the local machine shops sell their drops to the recyclers who in turn mark it up for sale to everyone else. The steel yard also stocks and sells new steel in sheets, angle iron, and strips at full market rate. Either way, shipping metals is expensive and somebody is going to pay for it.
 

GoceKU

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#12
In my opinion and around me steel is the cheapest material, I'll write couple of prices so you can compare, Prices new: Hot roll steel is around 0.8 - 1 euro/ kg, high carbon steel C45 is 1.3 - 2 euro Kg, tubing 0.6 - 1 euro/ kg, aluminium 3 - 5 euro/ kg, Plastic (teflon, nalon) 10 -25 euros/ kg.
For example hot roll 10mm round 1 meter long is 0.5 euro, 20mm round 1 meter long is 2 euro, C45 10mm round 1 meter long is 1.5 euros, 20mm round 1 meter long is close to 5 euros.
On the other hand there is scrap yard prices, from 0,22 euro/ kg to 0,5 euro/kg for steel and around 2 euros/ kg for aluminium, good pieces tend to be on the higher price.
 

RandyWilson

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#13
A good friend of mine owns a metal recycling business. He has nothing usable by us in the recycle side, and only stocks a bit of hot rolled bar and angle on the new side. Here, being a port city, the scrap goes straight to the docks and is loaded on to ships heading to Turkey.

Also, being a port city, if you don't have a shipyard PO backing you, the pricing make Metals Online a real bargain.
 

cascao

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#14
Because in China they don't spend money with OHSAS, marketing, fancy offices, CEO fast cars, government taxes, development, employee bonus, insurance...
 
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Because in China they don't spend money with OHSAS, marketing, fancy offices, CEO fast cars, government taxes, development, employee bonus, insurance...
Not totally true.
They have nice offices. CEO has fast cars, most managers of the larger companies drive nice cars, too. Government taxes in China are less than they are here in USA. Businesses over there pay 25% where we pay around 35% in taxes thereabouts. Larger companies do have employee bonuses and insurance, too. China has come a long ways from what it was 20 years ago. They have the rest of the world to thank for that, especially the Corporate giants of USA. China does have a OHSA similar to USA but not as harsh as it is here in USA. How about Brasil? Wasn't too bad down there 38 years ago when I visited there.
 

cascao

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#16
Brasil growed untill 2014 then started to fall and now economy isn't going well...
We need to get rid of corruption and modernize our tributary and labour legislation.
Today we pay around 45% in taxes.

And you right about China. Have seen some cheap manufacrures migrating to India
 

Downunder Bob

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#17
I understand the huge volume buying discount, but it sure is harder to understand how they can buy the material, produce & package the product, ship it from China, truck it to wholesalers & then retailers across the country and then have a price lower than we can buy the material to make it.
Your probably comparing the price of american made steel to the finished product made in china from chinese steel. That equation will never work. And the bought finished product will never be as good as the one you make.

If your looking for really good quality steel go to you local auto workshop and scrounge old drive shafts, surprising what you can make out of an old shaft, a brake disc, clutch plate etc., and other parts. especially cars made in Germany, Japan, USA and some others beware Korean and other asian. Also large truck workshops for larger size shafts. Even heavy earthmoving or mining equipment shops. Also try scrounging large RSJ and plate off cuts from structural engineering shops, that steel is always made to a spec.

Happy hunting.

Bob
 
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rwm

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#18
Multi factorial. Clearly all of the above arguments are at least partially true, adding up to a large cost difference.
Robert
 

Downunder Bob

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#19
Your probably comparing the price of american made steel to the finished product made in china from chinese steel. That equation will never work. And the bought finished product will never be as good as the one you make.

If your looking for really good quality steel go to you local auto workshop and scrounge old drive shafts, surprising what you can make out of an old shaft, a brake disc, clutch plate etc., and other parts. especially cars made in Germany, Japan, USA and some others beware Korean and other asian. Also large truck workshops for larger size shafts. Even heavy earthmoving or mining equipment shops. Also try scrounging large RSJ and plate off cuts from structural engineering shops, that steel is always made to a spec.

Happy hunting.

Bob
Sometimes the shops will let you have the offcuts before they go to the scrap yards, that way usually for free, or sling the guy a few beers, I gave one guy a slab and he's given me unrestricted access to his scrap bins, I've picked up some very nice pieces of high quality steel, now all I've got to do is find the time to start making stuff. works for me.
 

Tony Wells

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#20
Actually it does not, and cannot unless the product is set up as a loss-leader to draw a company into a market position. Any company cannot exist without a profit margin or serious subsidies, so selling a product at below cost is not sustainable, and the company will die a proper death. The comparison you are attempting to make is out of balance. The effect you observe from selling low cost product does have a negative effect on markets that cannot or choose not to compete on those terms, and in the long term is not healthy business, IMO. It is happening every day, but is slowly changing. It's a complicated problem that sounds simple.
 

RandyWilson

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#21
As often happens, this has turned into a China bashing thread, which I don't think was the OP's intent. It's not about trotting out the tired and out of date tales of why China products are cheap. It's about, at least to me, why we are being drug over the coals on the cost of small lots of materials. BMW, a company not known for dumping, will sell me a suspension press arbor set for less than the drill rod and good steel would cost me. And believe me, I tried making it out of 1020. it was comical. The answer of scavenging the scrap piles is laughable, not sustainable on a reasonable scale.
 

mcostello

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#22
I have about 2000 lbs of "not sustainable" grade of steel for personal projects, commercial jobs get proper new stuff.
 

Downunder Bob

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#23
As often happens, this has turned into a China bashing thread, which I don't think was the OP's intent. It's not about trotting out the tired and out of date tales of why China products are cheap. It's about, at least to me, why we are being drug over the coals on the cost of small lots of materials. BMW, a company not known for dumping, will sell me a suspension press arbor set for less than the drill rod and good steel would cost me. And believe me, I tried making it out of 1020. it was comical. The answer of scavenging the scrap piles is laughable, not sustainable on a reasonable scale.
Maybe not sustainable for you, but it works for me, and I know it works for others. Its high quality structural steel and it's free, it's only for hobby use, not for production. With high labour costs it's cheeper to throw stuff out than pay some one to sort it. Not all, but many shops willingly let you take it.
 

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#24
Also can't forget that most place recoup some on their "waste" material that is sold to recyclers...and there are TONS of it, so that comes off the bottom end prices of the already bulk purchases
 

KBeitz

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#25
I visit our local junkyard weekly. I got more good steel than I probably ever use.
I can't believe what people trash today...
 

JPigg55

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#26
Guess I can count myself lucky.
There's a large scrapper only about 25 miles from my house. They keep piles that they will resell on a per pound basis.
I should probably buy more from there and stock up except for when I need a specific material to work with. No good way ti ID what you can get from them.
Been a few years ago, but I bought probably 20 some feet of 12" channel iron (3/8" thick if memory serves), some amount of 2" angle iron, a 3.5' x 6' sheet of diamond plate, and about a 4 foot piece of 2" diameter stainless steel bar stock for a grand total of about $150 give or take.
 

magicniner

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#27
I buy new Mild and Carbon Steel in a variety of grades, Stainless Steels and Titanium and it's all remarkably cheap!
Are you buying full sheets/lengths or short sections?
 

nnam

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#28
Metal recycler yard near me don't sell to us. Unfortunately.

On why steel costs more than actual tools. This is a big United States problem. This problem is much bigger than that.

1. Raw material often costs more than finished products, this is not limited to tools.

Why? There can be many reasons. One of the reasons I can think of is that China wants to sell and sell and sell things again and again. If they sell raw material, US will make higher quality products, so they need to sell it at a price that the US can't produce.

Can China make a better product? Probably, but that's not their strategy. Dollar stores stuff break before they are used, or break after 1 lousy use.
Big problem.

Another reason I can think of is that the US people overworked like ants, have no time for hobby or anything else. Most do not fix their house, their cars. We're made to be robots. It's more efficient that way. Home owner association don't allow us to do much. County rules prevent us to do much (such as having a project car in my county).

So, we consume finished products, vs buying parts or raw materials. Hardware stores such as mom and pop are dying, not only because of Homedepot, it's because we don't consume odd and ends thing anymore. We buy a whole thing. Lots of time, a little thing fails and we don't know how to fix. Calling someone to fix would cost alot partly because they know we don't know, and ask for crazy price. I went to Acehardware the other day, and wish they don't die. They have things that places like Home depots don't have. It's rare and hard to find anything diy these days without going onto the Net and wait for several days.

2. We're a sick country.

Because of repetitive work (assembly line, robotic like work condition), we are over stressed with our mind and our muscle. We can't have hobby or trying to fix our car or our house. So, we're tend to be obese and unhealthy. We're sick. We pay for health cost. We work, we pay tax, pay for all kind of things and have no life.

This is a mess that the US must resolve.

People in this forum are probably few and far in between who try to save their lives with hobby.

People keep saying people in China make $1 an hour, bla bla. That's extremely misleading. Why don't they say how much they make per meal? How much they make per house? Per transport?

How about underage workers? Seriously? I used to work when I was 2nd grade in school. If kids were prevented to work, that's our dead sentence.

The US economists are just way off. Why didn't they look that way? Comparing dollar income is wrong and these Harvard graduates keep repeating them.

We need to see the truth. We need to find a way to bring manufacturing back to this country. We need to give the citizens lives again.
 

magicniner

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#29
In the UK unless you expect to buy just enough material to make a few low quality parts material is cheaper than finished parts.
If you expect to buy just enough material to make only a few parts you have to expect to pay for the pleasure of someone else holding the rest of the sheet/bar until they have another customer who wants less than a full length/sheet.
 

Superburban

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#30
How many steps are there in the sale and distribution of raw steel? I have no idea, but I would guess at least 3, if not more like 5 to 10, depending on location. In general, you can add 30% to the cost at each step. I imagine transportation also has a big factor in raw steel prices.

Now look at a lot of finished goods. Made in China, put in a container, and not looked at again, until it arrives at the warehouse. where it is sent to either the final purchaser, or selling retail store.

How does the new tariffs play into pricing?
 
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