The recent rally in steel prices has has continued to increase for both domestic and global markets. In fact, prices have even hit a high not seen since 2008. Many experts believe we aren't done seeing price hikes in the coming days. The price hike started rallying around from March 2021 and trends show it is only going to go higher.
In most large steel market like in India, the price increase started during the 3rd week of March 2021 which resulted in mills increasing the prices at the beginning of April. steel prices continue to surge and may begin impacting the scrap metal industry even in local towns.
Why are steel prices spiking?
Like we all learned in marketing 101, the driving factors that impact costs are supply and demand. COVID-19 created a unique situation where both demand and supply dropped, crippling many industries. Many workers couldn't go to their jobs to work on manufacturing new steel components, and the hit the world economy took meant the demand also declined. But with economic incentives,
industrial/residential/commercial stimulus programs, and the vaccine there was a sudden demand increase. But supply could not increase nearly as quickly as the demand did. We are seeing this across many industries in 2021. Increased demand with decreased supply is quickly leading to price hikes.
How International Trade Affects Steel Prices Domestically
Another factor in the surge of steel prices is international trade. There is a limit to "virgin" steel. Because of this, recycled metal is often required for the construction of new steel products. Not every nation has access to large amounts of steel, so international trading is a constant driving force on steel prices. But the international shipping industry has also taken a hit after COVID-19. Large delays in shipping lead to increased prices.
Expect a Decline in Prices
Given the record high steel prices, there’s a growing chance for capping the prices later this year around September, and then a potential steep fall. Leaders in the industry predict price stabilization at the end of the summer and price decreases in the fall.
How this affects steel prices
Steel price surges mean good news for scrap metal recycling companies. When international trade becomes expensive, and prices surge, there is an increased demand for recycled scrap. If you have scrap metal, now is a great time to recycle it before the prices fall again.