2021 has been a wild year for the metal industry as it experienced rapid price increases that resulted in steel prices hitting an all time high. As we mentioned in our last steel price update, this was due to increased demand and a supply shortage throughout the global steel market that left everyone scrambling to find raw material.
As the year is now in its 4th quarter, you may be wondering what the new year will look like for the steel industry in terms of price and steel availability. At Western States Metal Roofing, we understand the stress that the uncertainty of the steel situation can cause when you are a metal roofing professional. In order to keep you informed, we recently interviewed our purchasing manager to find out what is going on in the steel market.
In this article, we discuss the metal prices today and supply as well as what industry experts are predicting for 2022.
What Is Happening With The Steel Market Today?
As of October 2021, steel supply is just beginning to improve. While it’s nowhere near where it was prior to the start of the Covid 19 pandemic, there is better availability today. However, we have to emphasize that while things are starting to look up, we are still in a steel shortage.
There is still a very large demand for steel, especially from the automotive industry that needs steel for its computer chip shortage. Steel purchasers, including Western States Metal Roofing and other metal roofing manufacturers, are under allocation and are limited in the amount of steel that can be ordered. It also still takes 4-6 months to receive steel after it’s ordered.
Though we are not out of the steel crisis, there is a light at the end of the tunnel. As a result of steel supply not being as tight as it was before, the high steel prices have stabilized and are starting to level off. While the prices have not gone down, the industry is also not experiencing the month over month volatile price increases that occurred earlier in 2021. This brings a more positive outlook for steel in 2022.
What Will Happen To Steel Prices in 2022?
While no one knows what the future will bring, there are indicators showing us that 2022 will bring some relief to the steel industry as prices should remain stable. In fact, we have already seen steel quotes for as far out as March 2022 that reflect that the price of steel will remain flat and not dramatically change.
While there may be a small drop in price, we expect the price of steel overall to remain flat into the 2nd quarter of 2022 based on the state of the steel market today. This is because there is still a strain on steel supply on a global level. As imported steel is starting to come into the US more, it will help with the overall steel shortage. We should see the supply being less tight by the end of the 2nd quarter of 2022.
However, do not expect prices to drastically fall in 2022. Back in 2008, the steel industry went from boom to bust virtually overnight as prices fell sharply. However, today’s market brings a different set of circumstances, including the large demand for automobiles and a shortage of car chips, that would prevent that from happening.
If there are any significant price decreases for steel in 2022, the price would gradually decrease month over month, not have a sudden drop.
What Factors Are Currently Affecting The Steel Market Today?
- More Demand Than Supply
- Automotive industry demand
- Inflation
- Off shore steel
- China cutting back power
Supply and Demand
There is still more demand for steel than is available for production. As a result, there’s little incentive for both domestic and offshore steel mills to reduce their prices.
Automotive Industry Demand
As mentioned earlier, there is a large computer chip shortage that is affecting vehicle supply while the automotive industry is experiencing a surge in demand. This has resulted in automotive makers trying to acquire more steel which is taking away from other industries.
Inflation
Inflation is an area of concern for all US industries currently. However, it’s still too early to tell what role this will play in the US steel market.
Off Shore Steel
The supply of steel is being helped by imported steel starting to come back into the US. While this will help supply, it will not greatly affect steel pricing. Importers do not want their supply to lower prices too much or else they are subject to repercussions, as previously done with Section 232 tariffs during the last presidential administration.
China Cutting Back Power
China is trying to reduce carbon emissions by working fewer hours. While Western States Metal Roofing does not buy from China, much of the world does so this affects the price of steel overall.
How Does The Paint Resin Shortage Affect The Metal Roofing Industry?
There is another shortage that also affects the metal roofing industry besides steel. Paint resins, including those in the PVDF paint system that many metal panels use, are experiencing a shortage that has already doubled lead times.
Western States Metal Roofing does not expect this to have any effect on our supply through the first half of 2022. However, the general consensus throughout the paint industry is that the situation is expected to get worse throughout 2022.
Should You Buy Your Metal Roofing Now Or Wait?
Buying your metal now for a later project won’t necessarily save you money as the prices have stabilized and there is no longer a rising cost issue. However, it can save you time as supply of steel is still tight and will be for quite some time.
If you want to ensure you have the products you need while also having your project start on time and not deal with shipment delays, we highly recommend that our customers pre-purchase the metal roofing and siding products they will need ahead of time.
To get started on your metal roofing or siding project, request a quote today.
