The COVID-19 pandemic wreaked havoc with supply chains. Steel — an essential metal used in multiple manufacturing segments (everything from refrigerators to cars) — was not immune to these disruptions.
At the beginning of the pandemic, not surprisingly, steel demand dropped, but it quickly skyrocketed. Prior to the pandemic, steel was priced between $500 and $800 per ton but at one point rose to more than $1,900 per ton — 300% above their pre-pandemic levels.
American Iron and Steel Institute CEO Kevin Dempsey estimates that “for every $100 billion of new investment in infrastructure, that’s going to mean five million tons of additional steel demand.” Globally, steel demand in 2021 was expected to increase by 3.8% over 2020, according to the World Steel Association.
Additionally, the shortage of skilled workers is currently causing considerable difficulties. Companies and suppliers continue to struggle to meet increasing demand rates due to coronavirus impacts limiting the availability of parts and materials. Worker absenteeism, short-term shutdowns due to part shortages, and difficulties filling open positions could limit manufacturing’s growth potential.
Which Industries Are Affected?
It’s no secret that many manufacturers depend on steel for their products or services. From automakers to consumer electronics, steel has widespread use. Sometimes, it’s needed for the products themselves. Other times, it’s utilized for equipment, tools, machinery, and other hardware.
Some of the more notable industries that have been affected include:
- Consumer appliances
- Heavy machinery
Bad News for Buyers
Homebuilders can’t source basic materials like lumber or steel, which is delaying — and increasing the price of — the construction of new homes needed to meet this year’s buyer demand.
Maersk, one of the big three shipping companies, reported the worst delays were still on the U.S. west coast, where ships were waiting four weeks to unload due to the lack of workers on land.
Now, with Russia’s invasion of Ukraine, supply chain disruptions could go from bad to worse. Russia is an essential source of metals used in manufacturing, such as nickel, titanium, palladium, and aluminum. A combination of a prolonged conflict and tough sanctions could deliver the same kind of shock that we experienced during COVID.
Lead Times Getting Shorter
Although steel lead times have improved close to pre-pandemic timeframes, mill prices and supply chain costs remain significantly higher than historical levels. Last May, lead times stretched to 11 weeks or more.
By February, lead times had shortened to what is considered normal by historical standards, with hot-rolled lead times less than four weeks and cold-rolled and coated around six weeks. In other words, the time it takes the mills to make steel and process orders can’t get much shorter.
The obvious problem is that most manufacturers cannot access steel for immediate use, so they either wait until it is available or find alternatives.
Every Cloud Has a Silver Lining
Although it appears things will get better, any process, product, or service that depends on steel as a resource will likely experience significant slowdowns for some time. It’s unfortunate, but that’s the reality. There’s never been a better time to focus on material alternatives with continued supply chain disruptions.
Need Steel Today?
Mainline Metals is proud to offer our customers an abundant inventory of prime coated master coil and finished products — in stock today! Our extensive, global and domestic supply chain has enabled us to build and maintain inventories of prime, excess, and secondary hot-rolled, cold-rolled, and coated flat-rolled steel. With decades of experience, Mainline Metals is your trusted supplier of all types of steel products.
We are only as successful as our partners. For us, that means providing you with reliability even in times of volatility. Our distribution and service centers are conveniently located in the southeast, midwest, and southern regions of the US or reach out to us here for a quote.
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