Steel prices exploded throughout 2020 and 2021. Largely due to the COVID-19 pandemic and the resulting supply and labor disruptions, the price of steel soared 219% between January 2020 and August 2021 and reached a peak in September 2021. Since then, it has been falling and remains very unpredictable.
Steel prices are expected to stabilize, but it is currently unclear whether or how soon they will reach the pre-COVID-19 historical average.
Why did steel prices surge?
As you already know, the COVID-19 pandemic threw supply chains into complete chaos over the past two years. Steel is an essential metal found in everything from cars and heavy equipment to home appliances and furniture. At the very beginning of the pandemic, demand dropped as some manufacturing and building operations shut down, but then it quickly bounced back and surged to record highs.
The reason for the drastic increase in steel prices is the fact that many producers slashed output during the first half of 2020 due to a drop in manufacturing. Once manufacturing rebounded during the second half of 2020 and into 2021, demand massively outpaced available supply or production capabilities.
The increase in consumer demand for many products containing steel, like appliances, also strainedan already tenuous supply situation, further driving up prices.
The current state of steel prices
Since last September, steel prices have begun to stabilize as producers have made up the supply deficit and are now more accurately matching current demand. The problem that remains for steel producers and manufacturers alike, however, is the uncertainty.
It’s more difficult than ever to answer questions about where we are at in the pandemic and whether COVID-19 will worsen again, whether prices will go up or down, or whether steel demand for manufacturing will increase or decrease.
The good news for manufacturers and consumers is that most experts and industry leaders expect the price of steel to level out soon; they only differ on at what price.
What does this information mean for our customers?
The best anyone can say about the current steel market is that we will have to wait and see what happens to prices. A stable price looks likely, which means it will be easier for you to plan out your steel projects. At Highland Machine, we use vetted and trusted suppliers to source materials at competitive prices. Working closely with these suppliers, we will continue our efforts to mitigate the impact of any future market disruptions to our customers.
You’re our number one priority, and we will continue to work hard to make your projects as predictable, cost effective, and seamless as possible.
If you have questions, please contact us today.