Steel, like any other metal or commodity, can and does fluctuate in price. Lately, the price of steel has been going up due to several factors, and it’s helpful to understand how steel is priced and why it fluctuates.
Predominantly, the price of steel is determined by supply and demand. This is no different from any other commodity. If there is more steel than people want, the price will be lower. If there is not enough steel to meet demand, then the price will be higher.
Freight rates are also a big factor in the price of steel. When it costs more to ship steel, then the price of the steel generally rises. Conversely, when shipping is less expensive, steel is less expensive. As the price of oil has gone up recently, so has the cost of shipping by land, sea, and air, and thus the cost of commodities like steel have also been impacted.
Inflation is an unavoidable factor that hits steel along with everything else in the world. As inflation rises, prices of everything, including steel, go up as well.
Unexpected supply chain disruptions, like one going on right now with a pig iron/crude iron shortage due to the war in Ukraine, can also increase the price of steel. According to The Wall Street Journal, two thirds of all pig iron imported by the United States last year came from Russia and Ukraine. With Ukrainian shipments ceasing and importers no longer ordering from Russia, that would be—over the course of the year—4 million metric tons of pig iron not being imported this year that were last year. Instances like this have a huge impact on the supply-and-demand equation, driving up the price.
We here at Capital Steel deal mostly in special bar quality steel, aka SBQ, specifically long products. The pricing of SBQ long steel is largely based on SBQ long steel market reports, which study all aspects of the long steel market. It looks at historical data, market indicators, market trends, and more, and makes forecasts.
Part of being a strategic partner with our customers is transparency with pricing. We know, as do our customers, steel prices are rising, but when necessary, we help understand why and what might be changing in the near or distant future. Request a quote today and we will help you get what you need at the best possible price.