Steel Prices & Growth in Metal Fabrication
By: Aimee Sukol, JD/MA/MS Ed.
Steel literally forms the development of societies across the globe and availability is highly sensitive to domestic and global trends and events. Here, Meta Fab evaluates steel availability, production, and prices in the context of global events and policies to better understand what lays ahead for metal fabrication.
Impacts on the Price of Steel in Metal Fabrication
In 2002, the WTO changed the United States’ history of adjusting trade regulations in response to global conditions. Planned tariffs on imported steel to support the domestic steel supply industry were never implemented as violations of the WTO, which meant job losses in US steel supply and growth in downstream manufacturing. Growth for manufacturers downstream, such as metal fabricators occurred because they found cheaper prices overseas. Until 2019, downsized steel suppliers were positioned for limited domestic demand until new tariffs were introduced against steel imports. Because domestic steel was unprepared to fill a heavier demand for orders prices surged, and in response to increased prices, steel consumers changed their purchasing habits, e.g. material substitutions.
The pandemic had an immense impact on steel production and manufacturing. While tariffs removed overseas competition, steel producers also had to close their doors in response to COVID-19 leaving a void for domestic supply. In 2020, the federal stimulus package included over $5 trillion for manufacturing and construction, placing a higher demand for a limited supply of steel. Prices for steel spiked in early 2021, but in November 2021 the Biden administration removed 2018 steel tariffs so that prices began to stabilize by the end of 2021. At that point, steel suppliers began to replenish their inventories leading to steadily declining prices. That said, unfilled orders grew by 2% indicating steel suppliers continued to struggle with production management.
The Future of Metal Fabrication
Steel prices are likely to stabilize rather than increase in response to reopening of the global market and new domestic producers. The question moving forward is what’s in store for metal fabrication and the industries we serve.
Opportunities & Challenges
Metal fabricators may see challenges ahead. Larger OEM customers have added turnkey services to their own operations and continued global conflict makes prices and shipment unpredictable as metal fabrication is highly dependent on economic conditions. Predictions of a recession also present serious challenges. However, metal fabrication will see growth for several reasons among them innovations within the industry and beyond:
- Rise of automation and increased use of automated technologies in manufacturing
- Acceleration of machinery purchases ahead of price fluctuations
- Increased air travel
- Tech innovation and continued reliance on technology
- Increased emphasis on housing and infrastructure
Historically steel is highly sensitive to economic and political fluctuations and we have seen this over the past 25 years with changing administrative strategies and trade policies. Pandemic realities also had enormous impacts on capacity and purchasing habits though changes may not last. Emphasis on green production, global events, and the nature and flexibility of metal will continue to serve metal manufacturing. Metal fabricators that stay alert for economic and global events and focus on quality relationships with customers will endure and continue to grow.
For more information about Meta Fab’s full sheet metal services, contact Tony Varela at firstname.lastname@example.org.
- Trading Economics: https://tradingeconomics.com/commodity/steel?user=antonio
- The Fabricator: https://www.thefabricator.com/thefabricator/article/shopmanagement/metal-fabrication-ready-to-take-off-in-2022
- Design Build Network: https://www.designbuild-network.com/comment/us-steel-prices-eased-march-2022/
- The Fabricator: https://www.thefabricator.com/thefabricator/blog/metalsmaterials/steel-prices-how-we-got-here-and-what-could-happen