Metal prices increasing

 The recent return to work in the construction and automotive industry has seen significant demand for raw materials resulting in a price increase for steel on an almost daily basis. This is starting to affect a range of manufacturing sectors leading to volatility in price and shortages in supply industries. A lot of these materials such as HDG hot dipped Galvanized steel rely on the industrial powerhouses in metal production across Asia including China, Japan, Korea, and India. Some of these producers only have enough capacity for local demand and are struggling to ramp up capacity. 

The price increases are driven by several factors. Firstly higher input costs this is primarily Iron and scrap. The shortages in capacity caused by Covid shutdowns with reduced demand cannot be quickly reversed. The lack of availability leads to stock shortages and a mini panic is created.

Then the icing on the cake is freight rates, these have increased massively with contains to Europe typically changing from $2000 per 40ft to over $10,000 per container. With a combination of reduced number of ships along with containers in the wrong ports capacity is full to bursting.This has more impact on a price increase on lower price metals and a little less the higher the price point of the raw material.

This means that with shortages of supply prices are increasing significantly in some areas of demand for Galvanized coil prices have increased by over 50%. This means that prices will increase to the end-users and retailers. It also means increased material switching to metals like stainless steel especially ferritic grades like 430 which become competitive with Galvanized strip and wire yet offer increased corrosion resistance and longevity. 
However, with this switch in demand, this starts to impact material like stainless steel with stronger demand and longer lead times. Stainless steel prices haven’t been affected anything like as much as coated metals but prices from January 2021 are expected to be around 7% higher than December 2020. With limited capacity, these increases are expected to hold or increase throughout Q1

Long term these price levels are unlikely to be sustainable demand should level out and capacity be increased. In some instances product could be completely changed but in short term with contracts to supply material has to be supplied at all costs. 

This means alongside increased freight rates we expect significantly higher prices for Q1 and Q2 for Galvanized products including tying wire, fasteners, etc, similarly for Aluzinc and Aluminized. Stainless steel increases while smaller will remain upwards. We expect this to continue throughout the first half of the year. Beyond this it's too difficult to predict with the change in administration in the USA meaning tariffs could be reviewed, BREXIT trade discussions ongoing and hopefully the tide turning in the battle against COVID 19. Everyone is hoping for a better 2021 but we expect it will bring a different type of challenge.

 If you want more information on market pricing material availability please talk to us to find out how we can support you whether from our stock of over 5000 tonnes or by fixed price schedule supply.