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Riding Out The Fluctuating Steel Prices

Published by Lucy Thurston on

Fluctuating Steel

As the world continues to face the challenge of a cost-of-living crisis, one of the contributors is the surge in the prices of raw materials for manufacturers, adding to the overall cost of goods.

Commodity costs have been turbulent since the onset of the pandemic. During 2020, China increased its steel production by 4.9%, yet in other large steel-producing nations such as the USA, Japan, India and the EU, production dropped significantly – anywhere between 14 and 20 per cent. As a result, steel suppliers experienced a significant global supply shortage which had a knock-on effect on industries that used steel as a raw material.

In 2021 a surge in construction post covid put further pressure on raw material suppliers. Local steel suppliers in the UK were looking at increased steel prices of over 200%, driven in part by the escalating price of iron ore.

How This Is Affecting The Man On The Street

For normal businesses on the street, dependent on the price of a steel angle, or a simple sheet of steel, this meant that they had to pass those price increases further down the line to the consumer. The press was full of householders complaining that for simple renovation projects that might previously have cost them £5000, they were receiving quotes of over £10,000.

2022 prices have fluctuated significantly due to the war in Ukraine, the energy crisis, and China’s continuing severe covid restrictions, and with the news that British Steel started 2023 with an immediate £75 a tonne structural steel price hike, and the continuing unrest in Ukraine, steel suppliers in the UK will continue to be volatile for the foreseeable future.

Outlook For The Construction Industry

In general, there has been a 24.1% increase in construction material prices, driven in part by the shortage of those materials, specifically bricks, steel, paints, and electrical products.

While there is little that companies purchasing from UK steel suppliers can do to influence global events that are affecting prices, there are actions they can put into place to try and mitigate the negative impact on both their business and the cost that they are going to have to pass on to their customers. It will require additional effort and the ability to be more organised than you might usually be. The key is to instil a degree of predictability into an unpredictable climate, which in turn will give you a higher sense of overall control – at least in the short to medium term.

Keep Yourself Up-To-Date And Research The Market

There are plenty of resources that can keep you up to date almost minute by minute on the fluctuating pricing trends. The more you know and understand what drives the market, the more you can try and predict what is going to happen next and plan accordingly.

Make sure that you keep abreast of industry conversations. Many different industry sectors have trading and governing bodies that follow trends and lobby on behalf of their members. Make sure that you actively participate in the conversations that are happening. It also gives you great opportunities for networking too.

Plan Ahead

If you know what work you have coming up, you can calculate the quantities of steel angle and sheet steel and steel tube you may require in the future. This gives you the opportunity to potentially bulk buy when prices are reasonable. It may mean that you have cash tied up in stock for a while, but it also means that you will be in a position to honour a contract price based on current price levels rather than hiking (or swallowing) them due to an unexpected rise.

Explore Alternatives to Steel

Steel is such a versatile material in construction that finding an alternative that is going to provide the same properties at a better cost is not easy. However, when certain materials are in short supply, it does provide an opportunity to consider alternatives.

FRP – Fibre Reinforced Polymer – is a composite material that has a high ratio of strength to density, excellent corrosion resistance, and offers electrical, magnetic, and thermal properties.

The cost of FRP is more than steel, and if you are not used to using it as a material, you would need to take into account its different mechanical properties and how it is affected by loading, temperature and environmental conditions.

For the more artisanal of constructors, timber remains a potential alternative if your stainless steel tube steel suppliers are letting you down. It may be better priced by timber merchants, but it does need to be treated and maintained consistently over a long period of time to prevent it from deteriorating too quickly.

Build Relationships with Local Steel Suppliers

Your best plan to mitigate the effects of the fluctuating steel prices is to type in ‘steel tube suppliers near me’ in your search engine and build up relationships with your local suppliers who will work in partnership with their local clients to get the best possible prices all around.

Rapid Metals works closely with all its local construction and commercial contractor clients to get the best possible deals on all steel products. Contact the company today to discuss future project steel requirements.

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Riding Out The Fluctuating Steel Prices

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