...top of that is the China factor, which has added a huge demand for raw materials that was not present before." He says it will take time for supply to adjust, but prices will not fall back to 2002’s "depressed" level.

"I don’t see much rollback [in steel prices] on the horizon," agrees Michael R. Fischer, executive vice president and chief operating officer of Edward Kraemer & Sons Inc., Plain, Wis. He says higher steel prices are boosting the overall price of a bridge project by 10%, on average. "People who are delaying projects in hopes of steel prices coming down are making a mistake," adds Don Short, president of the Omaha-based estimating firm Tempest Co. "You may see a 2 to 3% adjustment, but prices are not coming down like they went up."

The second quarter showed just how sticky prices can be on the downward side. Steel mills drove prices up in the first quarter by attaching surcharges to cover the cost of scrap that increased from $112 a ton in March 2003 to $200 this March. "Scrap prices have fallen back to $165," says John Anton, steel analyst for Global Insights. "But producers are raising their base price nearly proportional to the decline in scrap, keeping overall prices relatively flat," he says.

Steel prices have declined sharply in most parts of the world, except the U.S., says Anton. He notes that prices in China were roughly equivalent to domestic prices but have fallen to about half of the U.S. price level. "If the spread between foreign and domestic steel prices continues, you will see imports moving back into the U.S. market in two to three months," says Anton.

One of the more surprising side effects of the steel price crisis has been its impact on small and disadvantaged firms, says Pat Loftus, president of High Steel Structures, Lancaster, Pa. Highest risk is for emerging subcontractors supplying steel items such as guardrail. "It’s taken the construction industry more than a decade to build up and develop a reliable supply system" of women- and minority-owned businesses, he points out. "Unfortunately we’re probably going to have to wipe out" those gains "and start all over again and rebuild it." That’s an outcome that Loftus calls "unconscionable."