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Steel can be used for many different things, such as for railways, ships, infrastructure and even weapons too.
This versatile metal can be used for a range of different solutions, but how much does it cost? How do suppliers price their steel supplies?
In this guide, you’ll find out everything you need to know about why future steel prices are inconsistent, including current estimates and projections.
Are you ready?
What’s in this guide?
What is steel?
Steel is made from iron and carbon, sometimes in combination with other elements, and it is one of the most popular metals in use today.
But not all types of steel are the same; in fact, there are over 3,500 different types of steel, that all have their elements and purposes.
There are four main groups that commercial steel typically falls into:
- Carbon Steels
- Alloy Steels
- Stainless Steels
- Tool Steels
The groups that the steel falls into generally depends on the percentage of other metals that are mixed in like chromium or nickel for example, as well as the alloy with high temperature.
Carbon steels are the most common forms of steel that are traditionally used for the construction of buildings, including rebar and mild steel.
Why is steel so important?
Steel is an essential metal for many reasons, mainly because they have these particular advantages over other metals:
✔ Hot and cold formable
✔ Wear resistant
✔ Hard and tough
✔ Resistant to corrosion
✔ Heat resistant
It is one of the most adaptable metals that can be used because it is multi-functional and can easily be altered to suit your needs.
What is steel used for?
Steel can be used for a wide range of products and structures, both for commercial and residential use.
Here are a few:
- Washing machines
- Microwave ovens
- Razor blades
- Door and window fittings
- Street furniture
- Masonry supports
- Shipping containers
- Car trims and grilles
- Refuse vehicles
- Surgical instruments
- MRI scanners
How much is steel?
So, now that you know what steel is and what it is traditionally used for, how much can you expect to pay for steel?
This is where things get a bit complicated.
The price of steel changes almost invariably, and prices can change overnight due to a fluctuation in the market, which is often dictated by a balance of supply and demand.
In other words, if there is a lot of demand but not a lot of supply, the prices increase; however, if there is a lot of supply but not a lot of demand, prices will decrease.
Which means that it’s difficult to give a definitive price for steel, because it could change tomorrow – however, here are some costs you could expect for popular types of steel products.
|Type of Steel||Weight||Price|
|Hot rolled coil||Tonne||$942.00|
|Hot rolled plate||Tonne||$1,046.00|
|Cold rolled coil||Tonne||$1,028.00|
To show how much these prices have changed, let’s take a look at what these costs were in December of 2017.
|Type of Steel||Weight||Price|
|Hot rolled coil||Tonne||$720.00|
|Hot rolled plate||Tonne||$707.00|
|Cold rolled coil||Tonne||$850.00|
As you can see, the prices of all of these steel products have increased substantially in only a couple of years, which is why many steel providers will encourage you to try and lock in the price of your steel building.
This is so you can benefit from the prices today, rather than risk the cost of your steel building increasing before you have made a payment.
How much is building with steel?
There are many different factors when it comes to figuring out how much building with steel will cost, including the materials and hiring workers to build your property.
However, here are some general prices you could use as a guide to help you navigate purchasing steel, based on the size.
Who produces the most steel?
According to the World Steel Association, here are the facts and figures regarding the finished steel produced on each continent in 2018.
- NAFTA: 140.4 million tonnes
- Central & South America: 42.3 million tonnes
- Africa: 38.2 million tonnes
- Europe: 164.3 million tonnes
- Other Europe: 42.2 million tonnes
- CIS: 53 million tonnes
- Middle East: 56.5 million tonnes
- Asia & Oceania: 1,111.1 million tonnes
Why are future steel prices unreliable?
Many factors contribute to the ultimate price of steel, which is why future steel prices are so unreliable.
This could include things such as political shifts across the globe, whether other countries decide to lower their production of steel or a country moving their dependence on steel over to another metal, for example.
With trade wars and tariffs on steel announced, buyer’s in America have to, unfortunately, deal with a certain amount of uncertainty when it comes to the future sales of steel.
A 25% tariff on all imported steel to America not only increased prices for the purchase of foreign steel, but the domestic steel industry also raised their prices at the same time.
As this was a significant change in policy, experts are unsure as to how exactly that will affect economics both in the short term and the long run.
The general price of steel has increased by 40% since March of 2018, and there is uncertainty involving when those prices might rise again.
Top 7 Factors involved with steel prices
So, what exactly can affect the future costs of steel? Let’s take a closer look.
- The supply and demand for steel
- Political relationships
- Trade wars
- Tariffs imposed on imports of steel
- The strength of the US dollar
- Any potential natural disasters
- Where you are in the USA
Supply and Demand
Supply and demand in economics refer to the balance between customers that need a specific product, and companies who will supply these elements.
For instance, if there is a lot of need for steel, but there is less supply it means that your steel is going to cost more.
On the other hand, if there is not a lot of need for steel, but there is a high production of steel, it will cost very little.
Because the scales can tip in either direction for a variety of reasons, prices can be substantially affected by supply and demand alone.
Did you know that China is one of the largest producers of steel in the world?
Many of their steel companies are in the Global Fortune 500, and dominate the list of the top steel producers on a global scale.
Taking this into consideration, having a strong relationship with China can mean more efficient imports of less expensive steel, with lower cost to export products too.
A trade war refers to the act of two states or countries raising tariffs or putting more barriers in place, which is usually in response to the other party doing the same thing.
Essentially, making it harder for two or more countries to trade.
The advantage of doing this is that it can sometimes help a country to protect its jobs and economy as there will be less dependency on the other state.
However, doing this can damage political relationships.
Tariffs are often used by countries to encourage domestic purchasing and trading because they are used to increase the cost of importing a foreign product.
In the case of steel, for example, American steel might be more expensive than steel from China, so tariffs will increase the cost of importing steel, making it less attractive to buyers.
This might mean that a steel building provider might choose American steel, thereby helping domestic economics.
The US Dollar
The strength and weakness of the US dollar are continually changing over time, due to many different variables including the power of the American economy.
Many countries compare their currency to the dollar, which makes it a global currency which varies in worth depending on foreign exchange and economic decisions.
Many natural disasters come with a minimal warning, and there’s usually not much that can be done about them, which is why they can have a significant impact on the cost of steel.
They can severely impact the economics of a country, as well as the balance between the supply and demand for steel as living spaces, need to be rebuilt.
Did you know that your location in the US can affect how much steel will cost?
This is often due to how easy it will be for you to access the market, which steel providers are near to you as well as their specific costs and fees.
In conclusion, future steel prices are inconsistent because of the various factors that go into the cost of steel, such as; politics, wars and natural disasters, as well as the strength of the US dollar.
Have you learnt everything you need to know about steel prices?
Do you want to learn more about building materials?
Check out the Green Building Elements guides here.