Many steel mills have increased prices multiple times since the beginning of 2023, resulting in challenges for steel fabrication suppliers to maintain costs and quality. While steel fabricators deal with this ongoing issue, let’s explore the reasons behind it.
Why the fast track to increase prices in the first quarter?
These upswings in steel costs have been a regular occurrence but are always in line with significant global events such as the pandemic or the war in Ukraine. The industry is now pointing to factors for the increases, such as disrupted production and fewer imports. Does that explanation justify the number of increases in such a short time?
Prices for scrap rose quickly in the first quarter, causing lower profits for steel mills. Additionally, mill capacity this year is low, down to approximately 75% of capacity, according to the American Iron and Steel Institute (AISI). However, prices have still risen significantly, and that is different from prior upcycles. What makes 2023 different and still a budgeting issue for steel fabrication? Because of the increase in interest rates, some factions were concerned that the economy would slide into the beginning of a recession. This apprehension could have caused suppliers to purchase less than expected, contributing to the steel price surge.
Will steel fabrication suppliers see relief in the rest of 2023?
Several industry experts expect some mitigation in steel prices in the remainder of the year. Reports indicate that imported steel shipments should increase, and its pricing is competitive with domestic suppliers. Demand is declining, which should also help lower costs.
While longer lead times are expected to continue, they are predicted to reduce over the year. These are good signs for steel fabrication suppliers to see better pricing and supply chain response throughout 2023. But recent years have proven to run contrary to expected trends.
At FI•CON, we have implemented processes and procedures to continue meeting our customers’ steel fabrication needs. To discuss your next project, contact us at ficonusa.com or (386) 792-3060.