Market Update: Committed to Fair Pricing in the Spring Manufacturing Industry

In the past, Tennessee Spring and Metal ordered wire, packaging, supplies, and other raw materials on an as-needed basis or when market costs were unusually low. This helped us respond to changing market conditions and offer our customers the lowest prices possible on high-quality, Made in America, springs.

However, over the past 12 months, and as a result of the pandemic-fueled supply chain crisis, we began pre-ordering wire and other raw materials based on anticipated demand. 

Supply Chain Strain

Thanks to the foresight of our procurement team, we were able to largely maintain pricing at a stable rate — despite the 52% increase in wire prices over the past six months — for our valued and long-standing customers.

Until now. Our stockpiles have run out and it’s time to reorder raw materials for the rest of the year. To continue to support you as an honest and reliable supplier and partner, we are — unfortunately and unavoidably — adjusting our spring prices to match rising market costs.

This is a supply chain crisis unlike any we’ve seen since we opened our doors in 1963. And although we are being forced to raise our prices, we’re hopeful that this crisis will, eventually, pass. 

The North American Steel Market Tracker recently released a report noting that “We forecast rising US steel supply in July-December 2021, with increased output from both new electric-arc furnace capacity as well as restarts of idled blast furnaces and rising import penetration. While we forecast that the supply increase will lead to a gradual reduction in flat steel product prices from record highs, we do not expect the increased supply to exceed demand from end-users. Rather, the rising supply will correct the supply-demand balance instead of tipping the market into oversupply.”

Although they’re talking about flat steel — and we deal in wire and rod — our specific supply chain crunch is similar and very, very real. Yet we’re optimistic that the market will stabilize and the costs of raw materials will go down and normalize. And when they do, rest assured that we’ll happily pass those savings on to you.

Price increases aren’t limited to wire and rod: transportation and packaging costs — such as the lumber for pallets and paper for cardboard boxes have increased exponentially. MSN Money reported on Tuesday, June 1, 2021, that “Despite a 20% pullback in recent weeks, random-length lumber futures are still up more than 400% from their April 2020 low.”

Naturally, we’re doing everything can to mitigate these shortages — our returnable skid program and recycled packaging processes are just two examples of how we’re working to be as efficient and resource-conscious as possible.

What Caused the Wire Supply Chain Crisis?

COVID-related shutdowns and slowdowns, which prevented wire suppliers and rod suppliers from operating at full capacity, and a post-COVID economic surge and a construction and manufacturing boom are further complicating the situation. 

The price increases are significant, but the extended lead times — in some cases, up to 22 weeks — are even more consequential. 

We used to order wire with confidence that it would be available immediately. We’re now ordering with the hope that it will be run in the near future. We are at the mercy of the production schedule of our wire suppliers and they, in turn, are hampered by the production schedule of their rod suppliers. 

To further complicate matters in the short-term, two large rod mills that supply raw material to our wire mills will be shutting down for a month this summer to work on improvements and to catch up on pre-existing (and overdue) customer orders. While this will present a tremendous strain on an already tightly-wound wire market, we hope that production will ramp up more quickly after the improvements have been made.

What Can Our Customers Do to Help?

We want to keep our prices as low as we possibly can. Send us your usage forecasts as early as possible!  

For more information about Tennessee Spring and Metal and our transparent price policies, contact us at 1-800-497-3545 or email us at info@tennesseespring.com.

Tennessee Spring and Metal is AS9100 Rev D, ISO 9001:2015 certified.