Six Events Impacting Steel Pails (Q2 2022)

May 19, 2022 | By Jeff Swan | Topics: Lead Times, Plain Pails, Steel Industry News

As we head into the second quarter of 2022, several major developments are happening within the world of raw materials – particularly steel:

Below we explain these six takeaways a little more; however, I advise you to subscribe to Steel Market Update to get all the latest steel and supply chain news.

President Biden Signs Higher Russian Steel Tariffs

On Friday, President Biden signed into law a bill that strips Russia and Belarus of their “permanent normal trade relations” and imports of energy from Russia.

Russia is currently the fifth-largest supplier of foreign steel to the United States, meaning a significant steel supplier is no longer available to domestic manufacturers. These tariffs come on top of the existing Section 232 tariffs on foreign steel in general, meaning that steel pricing and availability may worsen in the coming months.

Steel Prices See Increases Across the Board

Right when we started seeing some price easing for steel, the conflict in Ukraine seems to have wholly upended everything back to the pandemic highs we say last summer and fall.

The good news is that Steel Market Update reports that “Steel prices – along with prices for other commodities such oil – have normalized following the initial shock of the war. And future gains will be modest, some sources said. But others said the jury was still out until scrap prices settle later this month.” So we will have to wait and see how long these new prices stay around.

Ryerson CEO Predicts Stronger Demand and Higher Steel Prices

Ryerson is a Chicago area service center for all things steel and other industrial metals. Their CEO, Eddie Lehner, commented, “The ten-year average for HRC was around $600 going into 2020. But the averages now are moving much higher. Just given the overall uncertainty and volatility at hand, it’s hard to say that prices will normalize. I still think we’re in for a period of extreme price oscillations, at higher levels, as we navigate these unprecedented times.”

Lehner’s insight is incredibly valuable, as he is on the front lines when it comes to seeing steel pricing and demand. You can check out his full interview with SMU here.

Domestic Steel Utilization Back Below 80%

Just when we need more domestic steel production – the opposite happens.

Steel Market Update reports that “US steel output dipped 0.9% compared to the prior week and was 2.4% below the year-ago period when production was 1,768,000 net tons.” And now that Russian imports are being cut out of the US supply entirely, its hard to see utilization rates increasing anytime soon to meet what will soon be an influx of current Russian importers looking for domestic suppliers of steel.

High Raw Material Costs Push Up Pricing

While steel demand hasn’t changed much, raw material pricing has risen considerably this year. Some materials, like pig iron, have increased almost 50% since the war in Ukraine started in late February 2022.

The good news is that Steel Market Update reports that India and China are exporting enough raw materials to potentially replace the ones that used to come out of Ukraine and Russia (such as pig iron). These exports will take time to impact the market, but in the short term, expect these higher raw material prices to keep pushing up the pricing on finished goods.

New Buy American Rules for Infrastructure Bill

This new rule could have massive implications for the US raw materials industry as a whole. The following changes set for any projects funded by the “Infrastructure Investment and Jobs Act” are:

  • Iron and steel products must be “melted and poured” in the United States.
  • Manufactured goods must be finally made (substantially transformed) in the United States and contain at least 55% domestically made components.
  • Construction materials must be transformed in the United States before delivery to a job site.

So what do all these events mean for your steel pails?

The good news for you is that a lot of the new pricing and availability problems in the supply chain have started due to the ongoing conflict in Ukraine. Once that is resolved, several of these issues should begin to be resolved as well.

Overall, 2022 is shaping to be similar to 2021 regarding pricing, lead times, and raw material bottlenecks. While these problems aren’t going away entirely, we aren’t expecting shortages or price increases to be as bad as they were in 2021.

Jeff Swan

Hey there! My name's Jeff Swan and I'm the Sales and Marketing Specialist at Cleveland Steel Container.

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