Cold-rolled Steel – What is Going On?
RIDBA has spoken to a number of cold rolled steel suppliers with a view to gaining further insight into the situation of material shortages and price increases.
As you will be aware, the supply of these materials is currently a massive issue for the whole supply chain and primarily due to the ongoing effects of COVID-19. Global output dropped significantly last year and the knock-on effects of that continue to be felt throughout the supply chain. Off the back of that, steel prices are still increasing, on an almost daily basis. Last month saw another £30/ tonne rise meaning that steel prices have risen by £260 a tonne since last July.
The mills that closed down in the UK last March during the first lockdown are where the problems first started, as re-opening them is no easy feat, and can take anywhere between 3-6 months, with several only restarting in September. So, when demand picked up again from May, supply issues were already starting to occur and this gap in supply has grown exponentially as lead times remain extended. Remember, the construction industry has continued working throughout the pandemic. Outside of the UK, capacity in Europe was also greatly reduced due to COVID-19 and is still getting back up to speed.
Shipping costs and delays are now adding to this already volatile situation with boats arriving late with reduced tonnages making the certainty of supply impossible to predict.
There are also reduced exports from China and the Far East into global markets as they seek to boost their own economies – a reduction of some 70 million tonnes of steel exported from the regions in 2021 is predicted compared to previous years.
It is understood that when steel is becoming available, priority is going to the automotive industry after unexpected demand that mills have struggled to accommodate. Sources said steel producers would continue to limit output until at least the second quarter as they assess the demand progression from the automotive sector.
Whether you are a fabricator or a supplier, everyone is feeling the effects of these issues and doing what they can in these difficult, unprecedented circumstances, and it is predicted that we will continue to see supply remain very tight and costs continue to rise for the remainder of 2021.
Suppliers are recommending allowing a further 12-16% increase of already notified increases, many of which have come in from this month, to help prepare for estimation and tenders. Lead times are currently being quoted as anything from 8 weeks to 6 months and priority is being given to existing customers.
RIDBA is keen to hear from members that are being affected by these issues and we are keen to lead a discussion on this topic at the upcoming AGM on 22 April, which we would encourage all members to attend.