Outlining the current steel supply chain landscape
The entire industry continues to feel the impact of steel supply chain issues from the global pandemic and the war in Ukraine. We’ve experienced supply chain bottlenecks occurring on all parts of the supply chain. Factories were reducing workforces and lowering production capacity. All of this due to lockdown or illness causing production to drop. The shortage in production of non-steel products, such as semiconductors, had a chain reaction that drastically impacted the steel industry as we saw a decrease in demand for new builds.
Companies were seeking to rebuild their supply chains to recover. As companies attempted to rebound, the heightened demand caused additional steel supply chain issues. Steel factories were unable to keep up with the increase which lengthened lead times and extended operations beyond typical timeframes. The compounding effect caused certain steel products to be completely stopped from being manufactured as factories had to focus efforts in other areas and choose other areas to abandon.
A simple example that we saw of this was the manufacturing of square steel washers. While they were still needed, they were nowhere to be found. Companies had stopped manufacturing them to focus their efforts elsewhere. This small example shows the compounding effect of the overall difficult landscape.
As you can imagine, the supply chain issues are having a major impact on the cost of steel.
How steel supply chain challenges are impacting costs
The U.S. government index showed an almost 100% increase in costs from August 2020 to August 2021. This increase pushed pricing to the highest it had ever been since the start of the index. Since that peak in August of 2021, we have seen a gradual decline in pricing, though not enough to get us back to previous prices before 2021.
As shown below, we have recently experienced another spike in pricing. This one steeper than the last. The fluctuating costs in the market are causing both manufacturers and fabricators to work very closely on these pricing adjustments in order to provide accurate cost estimates. The most recent spike comes due to the industrial impact from the Russian invasion of Ukraine.
Simon Edwards gives an overview of that impact in an article that can be found here. The drastic shifts in both supply and demand over the past 2 years have put the industry on its toes. We currently find ourselves in a situation navigating increased pricing and how to find win-win solutions.
How is EZARC equipped to handle the challenges
Being in the steel fabrication business for over 30 years brings its fair share of ups and downs. Throughout EZARC’s history, we have continually been focused on finding solutions to all problems. We do this while putting relationships at the front of everything. We’ve been able to develop and cultivate long-standing relationships with our suppliers. This ensures we are getting the best pricing possible at the time. We constantly stay on top of what’s happening in the industry to provide accurate estimates on all jobs we price.
We’ve comprised our fabrication team of industry leaders and individuals who have been in the steel industry for over 40 years. While the current situations are unique and changing, our team remains consistent as we navigate through innovative solutions together to provide the best results for our clients.
We involve our entire team during the early stages of any project. This ensures we are providing the right pricing with realistic timelines out of the gate. We encourage authorization for early purchase of materials when we feel pricing will continue increasing so we can secure costs early and deliver projects on time and on budget. Whether executing in a design assist or design build role, we are focused on the end project starting day 1 and deliver each step of the way from preconstruction through installation.
Please reach out here for more information.