From the aerospace industry to auto parts, metal fabricators around the country have faced extreme difficulty getting their hands on what they need most: steel.
The United States is facing an extreme shortage of steel. Last quarter, unfulfilled orders of steel hit a five-year high, and steel inventories hit a 3.5 year low. To add to the already steep challenge that the industry is facing, “The benchmark price for hot-rolled steel hit $1,176/ton this month, its highest level in at least 13 years,” adding more expense to already costly projects.
Steel manufacturers are doing all they can. While they shut down production at the beginning of the COVID-19 pandemic in 2020, their fires are burning hot again, but even they’re experiencing challenges. They can’t get enough material. Some are so hard-pressed for materials, they can’t fulfill their own internal needs. Others have increased headcount by as much as 40% and started running on a 7-day schedule, but are experiencing delays in delivery 1.5x to 2x the normal delivery time.
Our members have been reporting that they have never seen such chaos in the steel market.Paul Nathanson, executive director at Coalition of American Metal Manufacturers and Users. Reuters.
Material shortage coupled with the nearly 160% jump in prices leaves manufacturers and fabricators with an impossible choice. Do they absorb the cost of the spike in material cost and hope for prices to start dropping, or do they pass along those costs to the consumers? Some major appliance and auto brands have been forced to raise prices after seeing drops in profit, and other small fabricators are barely breaking even.
This is all in spite of booming business. Many mills and fabricators have never seen more business than they’re seeing now. With any luck, that will continue. There is some hope on the horizon. Steel prices and supply are projected to start normalizing at the end of Q1, which is fast approaching.
What does that mean for customers and projects?
On a general level, it means there may be some delays in production. This of course will depend on the ability to acquire materials for a project and the project’s demands, but it is a possibility. You can trust that we’ll be transparent about what the shortage means for you and the timing of your project and if it’ll be affected at all.
You can also trust that while materials may be in short supply, our superior craftsmanship and work ethic never will be. We’re working hard to get your job done six days a week over a three shift schedule. And when we promise something, we always deliver. If you have a project in the pipeline, we want to talk about how we can make it happen.