Those of us in certain manufacturing sectors are acutely aware of the fluctuating price of steel.
As we know, steel is an essential element in so many areas, from major civil infrastructure projects to domestic appliances. This makes the price of steel an important trend to follow.
Factors Impacting the Price of Steel
As steel manufacture, import and export is a global business, it is reasonable to assume that the factors which impact daily steel prices will be many and varied. It also means that wise businessmen should keep an eye on potential global disruptions and plan accordingly.
Let’s explore some of these elements together.
Supply & Demand
It’s common knowledge that – as with any commodity – the issue of supply and demand raises its head. Lower supply levels push the price up and excess stock equals lower prices.
Within the steel industry, this is no different. However, a further point to tack onto this factor is forecasted supply and demand, which means understanding each element in the supply chain and looking for potential hiccups.
A large percentage of steel comes from recycled products. A shortage in these products will inevitably push the price of steel up as mining and manufacturing steel from the ground up (pun intended) is far more costly than using recycled materials.
While this certainly varies from country to country, it is a major influencer of steel prices. Steel mills are greedy beasts and require an enormous amount of energy to produce their final product. This has a direct bearing on production costs and is largely out of the control of the average steel manufacturer.
Economic and Political Issues
Another frustrating element to add to this mix lies within the local government’s policies and priorities. This, in addition to a frequently restless labour force and unforeseen Union agendas, adds costs and reduces profits.
These same economic factors have a direct bearing on the strength of the local currency on the world stage – another important factor to note.
Of course, we can add to these main issues with factors such as trade tariffs, wars or civil unrest, natural disasters, the health of the global economy, transportation costs, seasonal changes and industry trends.
At Steelmor we endeavour to keep a close eye on these matters to ensure a stable pricing structure for our valued clients. Please contact us for more information.