While steel remains one of the most reliable commodities on the planet, with its unquestioned durability and strength, it can also fluctuate wildly in terms of cost. But what are the factors that impact the price of steel around the world, and how can we try to measure how the cost will change in the future?
It turns out that there’s many different factors involved in setting the price of steel on the market, and each one of them is, in turn, susceptible to other market forces.
The Rules of Economics
Of course, the simple matter of supply and demand is one of the most prevalent forces that have an impact on steel prices. As the manufacturing industry booms, prices for steel products increase because more companies vie for a limited supply. As the market weakens, the balance of power shifts towards the customers of steel, and prices drop as a result.
If there’s too much steel on the market, steel as a product lowers in value. It’s something to consider the next time you hear that we’re making more steel globally than ever before.
Regional markets can have their own cost factors that can see local prices fluctuate. These could include local prices of steel components, transport or, in most cases, energy usage. Making steel requires an enormous amount of energy (usually in the form of oil) and even the smallest movements in local energy prices can have a tremendous impact on the final item’s cost.
Shipping and seasons
While steel is certainly lighter than many other building materials, moving a large amount of it across vast distances is a tough job. Shipping steel products between countries is a logistical challenge in itself, notwithstanding the myriad of tariffs, taxes and other incidental charges that destination countries can impose.
The seasons themselves can make prices of steel products rise. After all, it’s a lot harder and therefore costly to get steel into cities that are deep in snow, or steel components out of a country that is celebrating a seasonal holiday and effectively shuts down for a week or two.
Speaking of components, they themselves go through a price cycle that ultimately changes how expensive new steel is. Iron Ore and coal have their own issues to contend with that are well documented in the news every day. The easy availability of another main component, scrap steel, is largely dependent on how many old structures are being torn down lately, which in itself is reliant on a booming real estate market placing a demand for new structures.
In all, steel pricing a complicated affair, and these elements should be monitored for a clearer picture of what is going to happen in the future. In the meantime, the team at ShapeCUT are always ready to craft your steel projects that will last for many years to come.