As our business partner,
This document is to update our customers on recent events within our supply chain that have impacted all of us. Fabral is fortunate to operate in many markets and geographic regions across the US which gives us a good insight into the trends within our industry. I feel it is important that we share with you our information so together we are best prepared for any future developments.
As you are aware, the first half of 2013 has been a challenging start to the year within our industry. We endured a longer and more severe winter season than we have for many years; this combined with ongoing economic uncertainty softened demand throughout our supply chain, whether you are a farmer or building owner, a distributor, dealer or end-use customer. All the way back through the supply chain to our raw material and paint line suppliers, we have all been affected in some way.
The recent upturn in activity across our industry and in other adjacent construction markets, combined with reports that order backlogs are at record highs in some areas, is very encouraging. This in turn will help all of us in the supply chain recover some lost ground during the first half of the year.
This recent demand surge has also triggered some sharp price inflation from the steel mills. US Steel and other leading mills have secured market wide cost increases for both July and August, and a further increase from them has been presented for September. We have also seen inflationary pressures on paint supply and accessory items come through.
The impact of this quick upturn in demand and upward price movement will fuel greater short term demand and put pressure on the raw material supply chain. This pressure, combined with reduced capacity and unplanned outages at the steel mills will make the next few months interesting. We have already had reports, for example, that several steel mills that do not supply Fabral have been late with deliveries and that some paint lines are also pushing out lead times.
We have monitored these dynamics carefully for several months now and our supply team has been working closely with our vendors providing long range forecast to ensure that Fabral has the inventory and capacity in place to meet your needs. We will continue to monitor the situation closely; and as we gain greater clarity of the overall impact of the demand and cost increases, we will keep you informed.
I hope you have found this information useful as I intend to continue sending quarterly updates with regard to current market activity. As always, your feedback is extremely valuable so please send all comments to Fabral.com/JonHaleyFeedback. On behalf of all Fabral employees, thank you for your continued trust and loyalty to our company.
Jon Haley , Vice President of Sales – Fabral