Scrap metal dealers and steel-related businesses are facing a shortage of scrap that has slowed delivery times and driven up prices for some types of steel by 40 percent to 50 percent since the beginning of the year.

“It’s going up, up, up,” said Richard Nickerson, owner of Bangor Steel Service Inc. “The end product has doubled in price in the last four months.”

Industry economists attribute the shortage to surging production in Asia, primarily in China, which last year became the world’s largest steel producer. The country’s expanding steel industry turned out more than 200 million tons in 2003. In the process, China also became the world’s largest importer of iron ore and the first country to import more than $1 billion in U.S. scrap steel in a single year.

The Washington-based Emergency Steel Scrap Coalition reported scrap exports rose 89 percent between 2000 and 2003, to 11.9 billion tons. Scrap prices rose from around $65 a ton a year ago to more than $250, spiking above $300 per ton in February.

In an industry highly dependent upon recycled materials – many types of structural steel contain 95 percent or more of recycled scrap – the increase came as a jolt.

“No one anticipated this at all,” said Scott Melnick, spokesman for the American Institute of Steel Construction in Chicago. “If you look at the prices for scrap over the last 20 years, we’ve never seen a spike like this.”

The Associated General Contractors of America reports an increasing number of contractors having difficulty obtaining rebar, sprinkler pipe, metal wall studs, fasteners and guardrail materials. In a March 8 report, AGCA chief economist Ken Simonson said suppliers who once guaranteed price estimates for weeks have reduced their assurances to two or three days.

They have also, Simonson said, “added heavy surcharges to previously ‘firm’ prices and told contractors they must pay [the surcharges] or forgo delivery.”

Tim Adams, manager of marine hardware maker West Fabrication Inc. in Steuben, said materials deliveries have slowed while prices climbed 20 percent to 30 percent in the past few months. Like most steel-related businesses, Adams said the increases will eventually make their way through to the final customer.

“For the jobs we have taken, we haven’t been able to increase our quotes, so we’ve kind of had to eat the loss,” he said. “But in the next couple of weeks we are going to adjust our prices.”

In Bangor, Nickerson said steel suppliers and fabricators also pass increases straight through to the customers. The situation has created some maneuvering, he said.

Suppliers with stockpiled inventory are able to offer “old” prices. Suppliers with recently restocked items will pass on the current increases. An extra phone call or two in search of old prices could pay off.

“It’s in sort of transition right now,” he said. “We lose some because of the timing of our inventory, and we get some that way.”

Nationwide, companies are reporting price increases in everything from mattresses (steel springs) to exercise equipment and snow plows. Webber Supply Inc. in Bangor sent a notice to its heating and plumbing customers that prices for fuel oil storage tanks would increase 15 percent April 1.

Tim Smart, who handles purchasing for Webber, said the company has already seen 15 percent to 20 percent increases on black pipe and other steel supplies since the fall.

John Butts, executive director of Associated Constructors of Maine Inc., said contracts for federal, state and local roads, bridges, commercial buildings and schools are likely to begin including escalator clauses. The clauses would build some flexibility into the negotiated price of the contract, allowing them to increase in response to the price of steel.

“Some of our members are being affected, but I don’t think it is translating into canceled projects yet,” Butts said. “But if it keeps on going, when the warmer weather hits and construction actually starts up again, new construction will be affected.”

The spike caught off guard many in the industry who expected steel prices to drop after the European Union pressured President Bush to remove the 2-year-old tariffs on Nov. 11. The tariffs, intended to protect U.S. steel producers while they upgraded to more competitive operations, had held costs high by blocking imports of non-structural steel.

The surcharges on steel began almost immediately after the tariffs were removed. Melnick said AISC economists suspect scrap prices could level off toward the end of the summer. But the new demand from the Chinese markets appears a permanent addition to the global market. The country’s crude steel production capacity could reach 270 million tons by the end of 2005, more than 330 million tons by 2010.

Shanghai Baosteel Group Corp., China’s largest steel maker, hit $14 billion in revenue last year, a 48 percent increase. Profits rose 89 percent to $1.6 billion.

And it is apparently not only steel that is increasing in price. Daryl Smith at Lakeman & Sons in Holden said copper prices have also bounded ahead in the past two months.

“About 6 months ago, we were paying about 55 cents for number one copper, and now we’re paying 95 cents,” he said. “We’re right out straight – and that’s seven days a week.”