How the Metal Supply Chain is Adjusting to Current Events

In many ways, the metals business has never been better. High demand across virtually every industry has given metal fabricators fantastic business opportunities—but can the metal supply chains keep up?

The truth is that even in 2019, before the pandemic, metal manufacturing was still much lower than before the Great Recession. Since then, major global events have rocked the metal supply chain at every level, and now, in 2022, metal fabricators are facing unprecedented short supplies and rising prices.

The global metal supply chain is currently dealing with two major disruptions: the lingering effects of the COVID-19 pandemic and the war in Ukraine. Here, we’ll explain how these events are affecting the metal supply chain and what you can do to compensate.

China’s Zero-COVID Policy

More than two years after the start of the pandemic, it is still disrupting metal supply chains, especially those that involve China. In 2020, China implemented a zero-COVID policy that requires strict quarantines and lockdowns for every single case detected, which has led them to frequently and suddenly shut down important ports and factories.

This policy has had obvious impacts on manufacturing and shipping operations globally. Even highly localized and targeted restrictions create bottlenecks, especially at facilities like ports and foundries. A closure at a major port—for example, Ningbo Zhoushan Port, the third-busiest port in the world—can force manufacturing operations around the world to grind to a halt as they wait to ship or receive materials.

Even when ports are open, restrictions like mandatory testing and contact tracing continue to slow down shipping operations and cause delays. Combined with ongoing labor shortages in China’s manufacturing and shipping sectors, these restrictions have slowed down metal supply chains and made recovery difficult.

The War in Ukraine

Russia’s invasion of Ukraine—and the sanctions and geopolitical and economic uncertainties it has created—is disrupting global metal supply chains still in disarray from the COVID-19 pandemic.

Russia is one of the world’s top producers of aluminum, steel, and nickel, and the trade sanctions against it are causing rising prices of these metals in the expectation of short supplies. Ukraine itself is a major global exporter of iron and steel, and Russia and Ukraine are the main suppliers of metals to Europe. European manufacturers are now turning to alternate sources that may be geographically distant, like China, adding to shipping delays and exacerbating the metal supply chain issues there.

It’s not just iron and steel that are being affected by the war in Ukraine. Other metal supply chains are being threatened as well:

• Titanium: Both Russia and Ukraine produce and export titanium. Russia’s VSMPO-Avisma is the world’s largest producer of titanium sponge and an important supplier to major global aerospace companies.
• Nickel: Global nickel supplies were already tight before Russia invaded Ukraine, due largely to demand from steel production and the emerging electric vehicle industry. Nickel prices have skyrocketed as the conflict intensifies.
• Aluminum: Russia is one of the world’s largest producers of raw aluminum—the Russian company Rusal is the world’s largest aluminum producer outside of China. This will likely lead to aluminum shortages, and the already record-high prices will continue to rise.

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Mitigating Metal Supply Chain Issues

China’s zero-COVID restrictions have global effects because so many supply chains originate or pass through China. Likewise, Russia and Ukraine are big countries that produce a lot of the raw materials that feed those supply chains, so events there cause disruptions as well.

So what can we as American fabricators do about metal supply chain disruptions in China or Ukraine?

Well, not much. Fortunately, though, not all metal is produced in China and Russia. The United States is still one of the world’s top producers of steel and aluminum, and the metal recycling industry is growing, too. The pandemic forced us to start rethinking our supply chains. Now, local metal suppliers are becoming a bigger part of the metal supply chain as manufacturers seek to insulate themselves from global supply chain disruptions and secure a reliable source of materials.

Whether you’re sourcing metals as a major manufacturer, a small shop, or a hobbyist, consider looking close to home first. U.S. metals industries are growing, and keeping your metal supply chain domestic protects it from global disruptions.

Affordable and Reliable Metals

Sourcing metals has become a challenging and expensive exercise for many fabricators, but we want to help. Industrial Metal Service stocks a huge variety of aluminum, steel, and other specialty metals, and we ship nationwide. We have both new, mill-certified metals and verified metal remnants—scrap pieces of high-quality metals that are recycled and verified using XRF spectrometry. Verified remnants are a great option for shops looking for lower prices than new metals from a mill.