Billington warns of further steel price volatility ahead

Aaron Morby 2 years ago

Structural steelwork contractor Billington today warned of further strong market headwinds to come from price hikes and shortages of steel after unprecedented rises in the last 12 months.

Mark Smith says Billington has a strong order book for the remainder of 2021 and its facilities are now operating at full utilisation
Mark Smith says Billington has a strong order book for the remainder of 2021 and its facilities are now operating at full utilisation

The warning of further price volatility came after the Barnsley headquartered group revealed last year’s pre-tax profits plunged 72% to £1.7m after Covid-impacted sales slumped by 37% to £66m.

Mark Smith, chief executive officer, said that during the period when demand had dropped off, the price of iron ore and scrap steel had nearly doubled leading to major increases in the price of steel products, a trend he said that was expected to continue.

Operating margins reduced to 2.5% in the year as a result of the difficult trading environment.

“Since May 2020 steel price increases have been in the order of 40% and the scale and speed of the price rises is unprecedented.

“Additionally challenges have been faced with the restricted supply of cold-rolled steel and Brexit-related issues with imports.

“The market remains very competitive and continued price escalation and availability of some raw materials remains a concern,” warned Smith.

Billington’s business scale in the market, together with a hedging strategy covering most projects up to six months out, had reduced the immediate impact of price hikes. 

But he warned: “Over the longer term price rises have to be passed onto customers as far as possible.”

The impact of Covid on projects saw the UK structural steelwork market contract by around a fifth last year.

Current forecasts for the structural steelwork industry suggest the UK market will now return to growth with an increase of 16% this year and a further 7.4% in 2022. 

Billington said that while opportunities existed across Europe and were being actively pursued, no new business has been secured from the EU since the UK’s exit at the end of January 2020. 

Smith said that new business opportunities in the UK provided confidence that Billington would be able to secure sufficient volumes of contracts to maintain optimum output in the short to medium term.

He said: “Billington entered the year in a strong position to navigate the turbulent environment and remains a profitable and major supplier to the structural steel and safety solutions markets.

“We have a strong order book for the remainder of 2021 and our facilities are operating at full utilisation.

“Billington is a robust business, with good market positions and a committed workforce.  As we emerge from the pandemic the outlook for Billington is encouraging and I look forward to the future with cautious optimism.”

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