The price of steel today is eye-popping. This spells out painful consequences for lots of industrial sectors. According to Yahoo!, hot-rolled steel is now nearing a whopping $1,800 per ton. There are several factors playing into this dramatic increase from the $440 per ton pricing of August 2020. That is a more than fourfold jump. While the pandemic is partially to blame, it is not alone.
COVID-19
While not the only factor, COVID-19 has certainly played a large role in the dramatic price increase of steel. The corporate shutdowns and lockdowns of entire cities caused many work stoppages. This caused a sharp decline in production. As demand began to increase, the lower-than-normal supply caused an immediate effect on pricing.
American Economic Policy
Three years ago, the Trump administration placed 25% tariffs on steel and aluminum coming from many nations. That has brought painful results to Americans. In fact, American steel prices are almost 70% higher than steel from other countries. This sparked a group of more than 300 U.S. manufacturing businesses to ask President Biden to terminate the tariffs under Section 232 immediately.
The group warns that the high steel prices are a drag on the post-pandemic economic recovery in the United States. Because many manufacturers use only American steel, they are forced to wait disruptions and shortages to pass. The typical six week delivery quote is now replaced with delivery times reaching 20 weeks.
With the possible passing of a national infrastructure bill in the United States Congress, demand for American steel will increase exponentially. An already-strained steel manufacturing sector will be unable to meet the needs. This will delay new building projects and other construction needs.
Increased Residential Demands
Steel buildings and warehouse construction are not the only projects needing steel. As Americans spent large amounts of time at home during the pandemic, they began making plans for home renovations. The money saved by eating at home and forgoing vacations has spurred increased demand for home renovations, including new additions and even new appliances. This has placed a further demand on steel.
Weather-Related Factors
Intense cold snaps and ice and snow storms across parts Texas and the Northeast earlier this year has added more problems to the steel industry. As power outages affected these areas, refineries were forced to shut-down. Without fuel to power the furnaces, steel could not be manufactured. This added more delays and price increases.
Foreign Factors
Steel being carried by ship was blocked when one of the world’s largest ships became stuck, restricting passage in the Suez Canal. This week-long delay contributed to an already out-of-control problem.
Steel is Not Alone
Other industries have been hurt by many of these same factors. Lumber is now three-to-four times higher than a year ago. There is a lack of computer chips and even rental cars in the United States. Home construction and corporate warehouse construction are both delayed by months.
It Will Get Better
Allied Steel Buildings understands your concerns. As you struggle, we want you to know that we struggle with you. Until things get better, we suggests diversifying your building materials to be used alongside steel. This will help to lesson the pain of these shortages and high prices.
A Brighter Outlook
The National Association of Manufacturers suggests production will increase drastically in the next couple of months, perhaps, to pre-pandemic numbers. In fact, it appears that American steel production is beginning to increase already. As the increases occur, the prices will come down.
As we urge patience, Allied Steel Buildings representatives are available to address your questions and concerns. As we experience this pain together, we will soon join together in brighter times. Thank you for trusting us with your business.