Beyond the Tariffs – The Rising Cost of Steel

August 9, 2018

The skyrocketing cost of steel is not news to anyone. The newly imposed steel and aluminum tariffs have made world headlines but the tariffs are only part of the story. The cost of steel was on the rise well before the tariffs were imposed. At Better Tools, we want our customers to be informed about the drivers for these cost increases and what Better Tools is doing to help keep costs, and subsequently prices, down.

The Manufacturing Process
Razor blades are manufactured by a process known as strip grinding, wherein one continuous strip of steel is:

  • Stamped
  • Heat treated
  • Sharpened
  • Snapped off
  • And, finally packaged

This process begins with steel (stainless, carbon steel or other alloys) in the form of cold-rolled strip steel produced from cold-rolled coil (CRC).

 Price Volatility and Market Fluctuations
The price for CRC has fluctuated dramatically over the last decade, but has seen a steady increase since the beginning of 2016. Worldwide prices began that year just below $400 per metric ton and have peaked recently at almost $700.

Source: SteelBenchmarker™ CRC Price

Typically steel prices are a reflection of economic growth particularly in the following markets:

  • Construction
  • Automotive
  • Energy

China is, of course, the largest driver of worldwide steel prices, due to the sheer size of their exports. The increase in Chinese prices has been mitigated somewhat by the depreciation of the Yuan, softer-than-expected demand, and anti-dumping laws instituted by Taiwan and other nations.

Despite that, Chinese prices have risen from $300 per metric ton to almost $600 since the beginning of 2016. Meanwhile, U.S. prices have risen sharply from $550 to almost $1100, due to strong economic growth and, more recently, increased demand generated by the 24% National Security Tariffs on foreign steel under section 232 of the Trade Expansion Act of 1962.

Source: SteelBenchmarker™ CRC Price

The impact of these rising steel prices and tariffs naturally drives the cost of finished razors higher. However, we are determined to drive efficiency and minimize the impact on our customers.

Our Commitment to You
At Better Tools, we are not simply increasing prices across the board due to increasing steel costs. While doing so would be easiest for us, we know that doing so would not best serve our customers. We are devoted to developing and maintaining long-term relationships with our customers.

Wherever possible, we are committed to holding the line on our prices. In cases where we are experiencing a significant increase in our costs, we commit to our customers that we will only pass along the actual incremental cost we receive.

The reason for doing so is due to the current market volatility. We simply cannot predict what the future holds and we want to be transparent about that with our customers.

On behalf of the entire Better Tools team, we thank you for your patronage and look forward to continuing to serve your cutting needs.