Like any other materials in the construction industry, steel prices have gone up and for many reasons. The raw materials themselves have gone up in cost, and the increase in demand despite the decrease in production has caused such prices to move up. For companies that rely heavily on steel, this is worrying news indeed. What is the leading cause of steel prices going up? When will steel prices start to stabilize? What can I do to respond to the increase in steel prices? These are the questions that many construction companies will now be asking themselves, and if these are the questions you are asking yourself, you’re in luck.
Today, we’re going to answer all those three questions to give you a better of how to deal with increased steel prices:
What Is the Leading Cause of Steel Prices Going Up?
The main driver of increased steel prices is simple economics: increased demand and low supply. At the beginning of the pandemic, many steel mills couldn’t maintain their normal production levels. Many ended up lowering their production to save costs, while others had to shut down. Either way, this meant a drop in steel supply. However, leftover inventory was able to meet current demands temporarily, maintaining prices. When inventory levels depleted, that’s when prices shot up. It didn’t help that demand went up in 2021, forcing steel prices to go up.
When Will Steel Prices Start to Stabilize?
Hopefully, steel prices will stabilize soon enough. Steel mills are working incredibly hard to restore their steel production levels, but ensuring that new demands are met while still maintaining quality isn’t something to be done overnight. It takes time to increase, and it is safe to assume that prices will only start to stabilize in the next few months and not a few days. However, it is essential to know that demand isn’t slowing down either. In fact, it is still climbing, meaning that the day where supply meets demand to stabilize steel prices might be further than we expect. Regardless, once steel mills manage to meet their original production levels, things will calm down.
What Can I Do to Respond to the Increase in Steel Prices?
While the prices are still going up and have yet to stabilize, there are some things you can do to deal with the increase in steel prices. Generally, the main thing you can do is to partner with a fabricator that will guarantee material pricing for a set period. This ensures that you do not run into any surprise cost that will force you to rework your project costs down the line. Also, such partners will collect payment at the beginning of the project, meaning that once the cost is set and paid for, you have little to nothing to worry about down the line regarding steel.
It is unfortunate to know that steel prices are going up and that it will be quite some time before steel prices start to stabilize. However, this is a problem where all industries face, where the pandemic has disrupted supply and demand, causing prices to go haywire. Fortunately, there are ways to reduce the consequences of such fluctuations. By smartly working with professional fabricators, you can limit unnecessary costs to help you stay on top of your finances and your construction projects.
KGS Steel, Inc. is a full-line structural steel and carbon steel service center offering high-quality steel products to meet construction needs. If you are looking for a structural steel supplier in Nashville, contact us today!