What Influences the Price of Steel?
The factors that affect steel raw materials price changes are diverse. For any item, price changes are subject to multiple factors, which restrict and interact with each other. Especially in a certain stage, which factors are the most affected, they will be the key factors affecting price changes. The main factors affecting the price of steel raw materials are as follows:
1. Economic status
From a global perspective, steel demand continues to grow with the development of the world economy. From a country’s perspective, the development of the steel industry is also positively correlated with the country’s economic development.
The speed of economic growth directly affects society’s consumption demand for steel volume, thereby affecting the price of steel products. It can be said that the development of the steel industry is obviously affected by the economic cycle.
When the national economy is in a period of rapid growth, the market demand for steel products is strong and prices rise; when the national economy enters a period of adjustment, the price of steel products will also fall.
2. Cost status
The price of raw materials has the most direct and effective impact on the steel market. The raw materials mainly include iron ore, coke, coal, etc. The rise or fall of the price of raw materials directly affects the final ex-factory price of steel from the production cost.
The vast majority of China’s steel output is produced with iron ore as the basic raw material. Therefore, changes in iron ore prices are a key factor affecting the production costs of steel products. At the same time, the water, electricity, gas and other energy consumed in the production and operation of the steel industry and the transportation of steel products and cargo also constitute the operating costs and profitability of the steel industry.
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3. Technical level
The technical level is one of the important factors affecting the price of steel raw materials. The impact of technological progress on the price of steel raw materials mainly comes from three aspects: first, the impact on the production process and cost; second, the technological advancement leads to the production of steel substitutes, thereby reducing the demand for steel; third, Technological progress has led to the substitution of other materials for steel products, thereby increasing the demand for steel.
Further Reading: Steel Structure Installation & Design
4. Supply and demand
The market price of any commodity is closely related to the supply and demand situation, and steel raw materials are no exception. In the peak season of steel demand, steel price increases are a good guide for the market. Market prices follow the steel mills’ adjustments step by step.
In the case of market downturns and poor shipments, steel mills have to maintain market stability. Factory pricing cannot be in place in one step, otherwise, the market will decline faster. Only by stepwise, the market will have a buffer time to digest the existing inventory, which is conducive to the stability of market prices.
5. Trends in international steel prices
The price of relevant domestic steel raw materials is inextricably linked with the international market. The international steel market is dynamic, and the domestic market and the international market are interactive. You cannot just look at the impact of the international market on the domestic market.
Objectively speaking, the increase in exports of steel mills will have a phased impact on the market of a few varieties and some regions, but based on this, it is considered unrealistic to have a great impact on the entire steel market.
Therefore, paying attention to the changes in the international steel spot market price and the steel prices announced by relevant exchanges that have launched steel futures trading is good for understanding the trend of steel prices in my country.
The Pricing Factors You Control vs External Influencers
The five factors described above are external factors that affect the price of steel raw materials. These external factors will significantly affect the final cost of steel structure buildings.
However, in determining the price of steel structure buildings, there are also internal factors that customers can control, such as the size and design of the steel structure building. our K-Home has a professional team of designers and engineers who have participated in the completion of thousands of projects. we have rich experience in designing steel structure houses.
It can not only ensure the safety, beauty, and practicality of the house but also reduce the client’s budget to the greatest extent. Provide customers with the most economical and affordable solutions. As for external factors, we can analyze and forecast based on our years of experience and the most authoritative annual data, so that you can lock in the best time to buy steel structure houses.
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What Happened in 2021?
2021 is an extremely extraordinary year. In this year, steel raw materials price has experienced unprecedented fluctuations. The COVID-19 pandemic is still the main reason affecting economic development this year.
At the same time, along with natural disasters, floods in Shanxi Province, Henan Province have severely affected this year’s grain harvest. The rise in the futures prices of infrastructure and construction-related raw materials has also driven the rapid growth of steel raw materials prices and other related sectors and has reached new high prices in recent years.
However, with the joint efforts of the government and the market, the price of steel materials has gradually stabilized.
2022 Price Forecast
Looking forward to 2022, as the scope of vaccine injection expands, the COVID-19 pandemic will be further controlled and economic order will gradually return to normal. In the post-epidemic era, demand gradually returns to normal, but at the same time, the loose monetary environment created by the epidemic will also return to normal.
In 2022, steel raw materials prices may raise first and then fall, forming a pattern of high middle and low ends. According to the carbon neutrality target proposed by the country, the steel industry must effectively control the output of crude steel, and the output of crude steel in 2022 is expected to reach a new high.
There is still room for upside in steel raw materials prices in 2022. If steel profits improve, it will be difficult for steel mills to take the initiative to lower their operating rates. It is expected that the domestic steel supply will remain at a high level in the first half of the year, and may decline in the second half of the year under the influence of policies and profits.
Buying Your Building Now Versus Waiting
In summary, we will find that steel prices have always been unstable, and China’s domestic market conditions and the impact of the global epidemic on the economy have greatly increased the unpredictability of raw steel prices.
Despite the downturn in the overall market in 2021, the prices of steel raw materials have grown rapidly. If you like to invest in steel structure houses, the value that steel structure buildings bring to you is the most important. Buy your building now instead of waiting. Seize the opportunity to bring new opportunities to your career and life.
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About Author: K-HOME
K-home Steel Structure Co., Ltd covers an area of 120,000 square meters. We are engaged in the design, project budget, fabrication, and installation of PEB steel structures and sandwich panels with second-grade general contracting qualifications. Our products cover light steel structures, PEB buildings, low-cost prefab houses, container houses, C/Z steel, various models of color steel plate, PU sandwich panels, eps sandwich panels, rock wool sandwich panels, cold room panels, purification plates, and other construction materials.