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Steel Prices and Production: A Look Ahead at 2021

Steel prices have become a key topic of conversation among folks in the metal building industry recently — and with reason. As with so many aspects of life over the past year, the COVID-19 pandemic has made its mark on the steel industry. Here’s a quick overview of what the industry has experienced in recent months, and what experts expect to see as we continue into 2021.

The Pandemic’s Early Effects
As COVID-19 took hold and communities the world over implemented lockdown measures, demand for steel greatly slowed. In response, steel mills sold off their supplies and, in some instances, shut down altogether. As S&P Global reported, US Steel idled two of its furnaces in 2020’s second quarter, taking approximately 2.9 million tons of steel off the market with them. At about the same time, steel company NLMK found itself in the midst of a labor strike. Although NLMK continued producing its flat rolled steel, it did so on a reduced basis. On top of everything else, the United States also decided to decrease the amount of Mexican and Brazilian steel brought into the country. In terms of that impact, the 10% decrease on Brazil’s behalf meant that only about 60,000 tons of the product arrived during 2020’s fourth quarter, as opposed to the 350,000 tons originally planned.

The Impacts Once Companies and Communities Began Reopening
As the pandemic continued on and restrictions began to lighten somewhat, companies began opening their doors and working to return to business as usual. For companies that construct metal buildings or create accessories for them, that meant ordering steel. Of course, with inventories down and production severely slowed or halted, the product wasn’t as readily available as in the past. It’s an issue companies like ours are still contending with.
(Just a quick note: With our status as an essential business, Metallic Products never closed amid the pandemic.)

Anticipated Effects Over the Coming Months
In terms of steel availability, things are currently pretty tight. While mills are opening up again and getting back into the swing of things, they’re finding themselves deluged with orders from companies that are in the same boat. As a result, steel prices have seen steep increases — a trend that is likely to continue through at least the near future. Compounding the issue is the fact that steel deliveries are now taking place on an extended timeline. For instance, at Metallic Products we’ve noticed that steel orders for our die formed products, which typically take about two months or so to arrive, are now sitting at about the five-month mark. Put simply, companies everywhere are bracing their customers for coming price increases — not because they want to, but because they’re facing increases themselves. At the same time, some are also finding themselves in a situation where a lack of steel means they can’t produce their products on a traditional timetable.

As the oft-overused pandemic adage goes, “we’re in this together.” Issues such as those listed above will likely continue to impact the metal building world well into 2021. But we’re all tough as steel, friends — and we’ll come out stronger in the end. If you have questions on any of this, or if there’s anything else Metallic Products can help with, feel free to get in touch. Our team is always glad to assist.