Throughout 2021, the metal market has experienced a sharp rise in prices for key materials like steel, stainless steel, copper, and other base metals. These fluctuations have made it challenging for manufacturers to plan and budget effectively. However, ESI has developed strategies to navigate these market shifts, ensuring that we continue to deliver high-quality, cost-effective metal solutions to our customers.
Our long-standing expertise in working with various metals has given us a unique perspective on how price volatility impacts business operations. This insight allows us to proactively adjust our processes and sourcing strategies to maintain competitive pricing without compromising quality.
Why Are Metal Prices Rising?
According to a recent article in the New York Times, steel, stainless steel, aluminum, and copper are reaching record highs. There are three main factors contributing to this trend in the post-pandemic economic recovery:
1. Tariffs and Reshoring Efforts
The U.S. government has been implementing tariffs to reduce reliance on foreign imports, which has led to increased domestic production. This shift has also encouraged companies to bring manufacturing back to the U.S., creating new job opportunities. However, this movement has also contributed to rising costs as supply chains adjust. For example, aluminum importers are facing shortages from Canada, while demand for copper and nickel is surging due to growth in the energy storage and electric vehicle sectors.
This reshoring effort accelerated during the pandemic, and although some supply chain issues have eased, many tariffs remain in place, continuing to affect pricing.
2. Pandemic-Related Transportation Disruptions
Supply chain disruptions caused by the pandemic have worsened, leading to raw material shortages and higher freight costs. According to reports, China’s 10 largest ports saw an average 126% increase in D&D charges compared to previous years. These costs are being passed along to manufacturers, further driving up metal prices.
Domestically, truck driver shortages—exacerbated by the pandemic and the surge in e-commerce—have created what some call a “shipping Armageddon.†These challenges are extending lead times and making it harder for businesses to plan their production schedules.
3. Global Supply Constraints
As demand outpaces supply, quoting accurate pricing and lead times for manufacturing projects has become increasingly difficult. This imbalance is expected to persist as industries ramp up production during the post-pandemic recovery. Additionally, growing investments in clean technology and infrastructure in both the U.S. and China are fueling continued demand for metals, keeping prices elevated.
Which Metals Are Most Affected?
While nearly all metals are impacted by supply shortages and high demand, the most commonly used industrial metals—steel, aluminum, copper, and nickel—are experiencing the biggest price increases. Here’s a breakdown of each:
- Steel & Stainless: Consolidation and reshoring of steel operations, combined with reduced scrap availability, have driven up production costs.
- Aluminum: Canada, a major supplier to the U.S., has imposed export quotas, limiting availability and pushing prices higher.
- Copper: Essential for electronics and EVs, copper faces ongoing supply constraints due to strong demand in renewable energy, microchips, and infrastructure projects.
How to Select the Right Material for Your Stamped Metal Part: Learn more here
When Will Prices Drop?
Although metal prices are expected to eventually decline as the global economy stabilizes, they are unlikely to return to pre-pandemic levels soon. The U.S. and Chinese infrastructure plans will keep demand high, and shipping challenges may continue to extend lead times. As a result, manufacturers should plan for longer delivery windows in 2022.
Stay Competitive with Cost-Efficient Metal Products from ESI
With sourcing uncertainties and tight supply chains, project delays have become common. At ESI, we understand how critical it is to manage both cost and timing effectively. Our 30+ years of relationships with metal suppliers give us valuable insights into market trends, allowing us to help you find alternative materials or design solutions that can improve efficiency and reduce costs.
No matter how the market evolves, our team is committed to delivering competitive pricing and reliable service. We closely monitor metal price fluctuations and work with you to ensure your project stays on track and within budget. Contact us today to learn more about our metal products and services!
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