Like every other commodity, steel reinforcement bars for Concrete Works is subject to price fluctuations. Everything from fuel prices to the cost of the raw materials has an impact on the daily price of steel. Regardless of your role in the construction industry, it’s important to have a finger on the pulse of the steel reinforcement bars market.
Steel prices are always changing in ways critical to the construction industry and in adjacent industries. Let’s examine some of the factors that play an essential role in determining the price of reinforcement steel.
Supply and Demand
Like all commodities, supply and demand play a major role in determining the price of reinforcement bars. Not only is the price of steel determined by current supply and demand, but it’s also forecasted by supply and demand. The more information available, the more accurate the forecast for steel prices.
The basic concept of supply and demand:
- The higher the demand or lower the supply, the higher the price.
- The lower the demand or higher the supply, the lower the price.
It’s important to note that supply and demand are not the same around the world. Local, regional, and global demand can peak which causes the price of steel to fluctuate worldwide. While one city may be experiencing a building boom another area may be experiencing a lull in the expansion. In this regard, supply and demand will cause steel prices to fluctuate globally.
Costs of Energy and Raw Materials
Steel is made of two materials: scrap metal and iron ore. When the supply of either of these materials is limited, demand typically exceeds supply. This causes the price of steel to rise.
Oil is one of the most influential factors impacting the price of steel. In fact, when you compare trends in oil prices and steel prices, you will see them peak simultaneously. Essential when oil prices are low, shipping finished and raw materials cost less (as less fuel is needed). As oil prices rise, the price of steel rises.
Additionally, it takes a lot of heat to melt steel. Heat requires energy and when costs of energy are high, the price of steel will increase. Oil plays the strongest role in the price of steel. When the oil is cheap, shipping raw and finished materials cost less. When oil prices rise, steel prices rise.
Availability of Recycled Steel
Steel prices are also influenced by the availability of recycled steel. Steel is one of the most recycled materials on the planet, reaching recycling rates as high as 60%. The amount of available recycled steel depends on the current inventory of steel present in any specific country or region of the world.
The availability of recycled steel will vary from region to region. For example, North America has a large existing infrastructure of buildings crafted from steel. Therefore,
steel is readily available to be recycled as buildings are demolished, renovated, or steel is replaced. Since January 1, 2016, more than 63 million tons of recycled steel was produced in North America alone. In fact, steel is North America’s number one recycled material. However, in other countries with less modern infrastructure, such as China, there is limited steel in current structures. Since there is less recycled steel available to the market the price of steel is more reliant on recently forged steel.
Time of Year
Time of year has a significant impact on the price of steel. Weather, seasonal highs and lows, and holidays impact the output of newly forged steel which directly impacts supply and demand. Time of year also impacts shipping patterns and transit modes. So it’s important to think about the time of year you will need reinforcement steel and order accordingly.
In the construction and metal building industry, the price of steel is one of the biggest factors impacting profit and loss. If steel reinforcement bars are an integral part of your business, you should follow world news and the metal markets, taking note of recent trends and market fluctuations.
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