Steel Price Increase Blog Post

 

It’s no secret – the steel price increase continues to climb, and it appears it will continue to do so for the foreseeable future. Every penny seems to matter in a year with so much turmoil and at times razor-thin margins for error. This post will give you some tips on surviving the rising costs of steel and positioning yourself more favorably when the situation arises.

What’s Causing The Steel Price Increase?

The price of steel is rapidly rising. The cost has increased by more than 60% since August 2020, and it appears prices have not yet peaked. In short, the simple economic principle of supply and demand is wreaking havoc on prices. 

“What happened, which is similar to lumber, demand during COVID-19 was stronger than first anticipated because of switches in consumption patterns. Instead of paying for experiences and vacations, they were buying a new lawnmower, buying a new car, or white goods like appliances—which are steel-intensive,” Thorsten Schier, a metals expert at Fastmarkets, tells Fortune.

Another factor is finding workers; many manufacturers struggle to hire workers to run machinery, weld, paint, and overall work. This is causing delays in the supply chain, and it’s not getting better anytime soon.

Steel supply is low relative to the demand in the current marketplace, thus driving up the cost. Many industry experts believe we haven’t seen the worst of it either, with a majority participated in a Steel Market Update poll predicting it peaks in February. The material handling industry is not immune, as lead times on new orders have extended to 52 months in some cases. Steel tariffs did not help matters much, as the 25% tariff rate raised the consumer burden to nearly $3 billion.Steel Price Increase 2020

How To Deal With Steel Price Increases

Order Steel Now

With lead times extending out months, it’s best to figure out your new racking needs as soon as possible. In this case, the sooner, the better, especially with new material. But what about used material?

Invest in Used Steel Pallet Rack Products

You can save a buck or two by purchasing used. This year, we’ve seen a sharp increase in end-users selling their pallet racking due to downsizing, scale-backs, and, unfortunately, even closures. Often, wholesalers have access to an abundance of used material in excellent condition, saving you money and getting you the material you need in a timely fashion.

Plan Ahead

As the old saying goes, failure to plan is a plan to fail. While failure may be a strong word in this context, not having a good plan in place could set you back on your goals and possibly even result in lost revenue. The more detailed your planning is, the easier it is to fulfill your orders and needs.

Consider Steel Surcharges

An additional wrinkle to the increases is steel surcharges. As you may know, these additional costs are put in place to account for and recoup the loss on the more variable factors and parts within the entire supply chain. We currently see manufacturers requiring material to be shipped within a specific period, thus holding that surcharge or adding additional charges upon shipment. 

Please let us know if you have any additional questions about how the current steel environment will affect prices? As always, our goal is to help you!

 

What’s Causing The Steel Price Increase?

The price of steel is rapidly rising. The cost has increased by more than 60% since August 2020, and it appears prices have not yet peaked. In short, the simple economic principle of supply and demand is wreaking havoc on prices. 

“What happened, which is similar to lumber, demand during COVID-19 was stronger than first anticipated because of switches in consumption patterns. Instead of paying for experiences and vacations, they were buying a new lawnmower, buying a new car, or white goods like appliances—which are steel-intensive,” Thorsten Schier, a metals expert at Fastmarkets, tells Fortune.

Another factor is finding workers, many manufactures are struggling to hire workers to run machinery, weld, paint, and overall work. This is causing delays in the supply chain and it’s not getting better anytime soon.

Steel supply is low relative to the demand in the current marketplace, thus driving up the cost. Many industry experts believe we haven’t seen the worst of it either, with a majority that participated in a Steel Market Update poll predicting it peaks in February. The material handling industry is not immune, as lead times on new orders have extended to as much as 52 months in some cases. Steel tariffs did not help matters much, as the 25% tariff rate played a part in raising the consumer burden to nearly $3 billion.

How To Deal With Steel Price Increases

 

Order Steel Now

With lead times extending out months, it’s best to figure out your new racking needs as soon as possible. In this case, the sooner, the better, especially with new material. But what about used material?

Invest in Used Steel Pallet Rack Products

It goes without saying that you can save a buck or two by purchasing used. This year, we’ve seen a sharp increase in end-users selling their pallet racking due to downsizing, scale-backs, and, unfortunately, even closures. Often, wholesalers have access to an abundance of used material in excellent condition, saving you money and getting you the material you need in a timely fashion.

Plan Ahead width=

As the old saying goes, failure to plan is a plan to fail. While failure may be a strong word in this context, not having a good plan in place could set you back on your goals and possibly even result in lost revenue. The more detailed your planning is, the easier it is for us to fulfill your orders and needs.

Consider Steel Surcharges

An additional wrinkle to the increases is steel surcharges. As you may know, these additional costs are put in place to account for and recoup the loss on the more variable factors and parts within the entire supply chain. We currently see manufacturers requiring material to be shipped within a specific time period, thus holding that surcharge or adding additional charges upon shipment. 

If you have any additional questions about how the current steel environment will affect prices, please let us know. As always, our goal is to help you!