Price fluctuations are felt everywhere. Across every industry and in every business – steel prices are no exception.
Having a clearer understanding of the volatility of steel pricing and how it is influenced by various factors will help in decision-making, strategic planning of projects, as well as in managing budgets.
Some of the main factors to be aware of, which we’ll look at in more detail below, include the fluctuations in raw material costs, demand and supply, trade policies, transport costs, and energy prices.
At Morfab, we understand the impact that market changes can have on pricing, which is why we are always clear and transparent about all costs. We work with you and your budgets to come up with the best steel fabrication solution for your project.
Steel price factors
Understanding the influences on the steel market will help you make the best and most informed decision for you.
Some of the main factors affecting pricing include:
Raw material costs
Raw materials (such as iron ore in steel) will directly impact the price of steel products. This is important to be aware of when choosing the best and most appropriate solution for your project.
It’s also important to note that the price of scrap metal can also affect steel prices (i.e. if the price of scrap metal is high, the price of steel will be high), and this is important to keep an eye on.
Demand and supply fluctuations
Demand and supply continuously affect the price of steel. For example, currently, there is a rising demand for steel in construction, driving prices upward. However, this can go, and has been known to, go the other way.
Energy prices
Steel fabrication processes consume a significant amount of energy, which directly impacts the price as fabricators incorporate this cost into their pricing of steel works, including the processes required, the duration of each process, and other factors.
Government/trade policies and laws
Structural steel is governed by numerous guidelines and laws, including tariffs that they place on imports. While this helps improve competition in the domestic steel market, it will also lead to a rise in prices for consumers.
You must also factor in transportation and shipping costs, as these will vary depending on the freight option you use and the locations from and to, you are transporting.
Factors affecting shipping can include politics, labour shortages/influences, fuel prices, etc.
Economic conditions
Global and even local economic conditions affect all sectors. These areas are often outside of anyone’s control but are felt greatly. For example, entering into a recession, COVID-19, etc.
Advances in technology
We all love technology. It has enabled us to automate a lot of those labour intensive repetitive tasks, create greater efficiencies and more innovative designs, control costs, and, in some areas, use different raw materials to further reduce costs.
Ultimately, the right technology can help to lower costs.
Seasonal factors
It may seem a little far-fetched, but steel fabrication prices can be affected by the time of year. For example, we will see a decrease in the price of steel during the winter months, potentially as there is less work on-site and construction compared to the summer when demand is higher.
Changing consumer preferences
Customers can play a significant role in influencing pricing. For example, there is now a greater desire to work with companies that operate as sustainably as possible while still providing high-quality, robust steel products – all factors which can drive prices up.
Steel price index
You can use the steel price index to monitor steel prices and provide you with a detailed view of the steel market and pricing trends at this point in time. The steel pricing index serves as a valuable reference point, helping with budgeting and planning and identifying costs associated with specific areas and industry sectors.
Steel supply and demand – value vs. price
When we examine all of the influencing factors affecting steel prices, it’s important to note that not every decision should be based on price alone.
Value should play a big part in your decision-making and should be weighed alongside costs.
For example, what value does the fabricator you have chosen to work with bring? What are their quality control procedures? Do you have a dedicated account manager who will work with you from start to finish? Have they worked on similar projects before so have experience and knowledge in the area? What are their levels of customer service?
There is so much more to finding the right steel partner than simply basing your decision on price.
(To find out more about Morfab and our next post on structural tubular steel, click here.)
Steel fabrication near me
It’s important for businesses to be agile and adapt to market changes in a way that doesn’t negatively impact the overall project.
The focus should be on continuing to plan and manage costs in order to maintain stability and ultimately remain competitive.
Trust us when we say the steel landscape is incredibly dynamic, and with numerous steel cost drivers, it’s essential that businesses monitor and analyse these in order to be able to adapt and thrive.
At Morfabrication, we work with our clients from the initial concept right through to the delivery and installation of structural steel.
Our pricing is clear and transparent, with no hidden costs.
To find out more call us on 0191 8162718.