Why are Steel and Aluminum Prices Rising?

Steel and aluminum are in short supply in the United States, and prices are surging, driving up costs and squeezing manufacturer margins. We’ve seen steel and aluminum prices rising steadily since the end of 2020 as global production begins to recover from the pandemic shutdowns.

Steel and aluminum prices are rising for complex reasons, including pandemic-related supply chain disruptions and a global energy crunch. Unfortunately, these problems don’t seem to be going away any time soon. The current shortages have made steel and aluminum recycling more attractive than ever as a way to help mitigate rising prices.

Why Steel and Aluminum Prices Are Rising

There are several reasons steel and aluminum prices are rising, and they all come back to the ongoing effects of the COVID-19 pandemic on the global economy.

Supply Chain Slowdowns

When COVID-19 was wreaking havoc on the economy in early 2020, most domestic mills were forced to either drastically cut production or shut down entirely. At the time, the demand for steel and aluminum products had also dropped because of the shutdowns.

However, that’s no longer the case. As the economy begins to recover from the pandemic, demand for materials like steel and aluminum has spiked, but global supply chains are still reeling from the pandemic. Domestic mills that cut production last year fearing a prolonged downturn have been slow to ramp up production again, despite increased demand.

Shipping Bottlenecks

Shipping disruptions and backlogs have also created shortages, causing steel and aluminum prices to rise. Major ports like Los Angeles are jammed with ships waiting to be unloaded, and a shortage of shipping containers has slowed things even further. This has created bottlenecks in the supply chain, and manufacturers are facing long lead times and higher prices.

Power Supply Problems in China

China, which produces more than half of the world’s steel and aluminum, is currently facing a power shortage. Tight coal supplies have led to blackouts across the country, suspending production in many industrial plants. The power crunch has affected industries across China, hitting the steel and aluminum industries particularly hard. These disruptions have further squeezed supplies of steel and aluminum and contributed to rising prices.

The Benefits of Steel and Aluminum Recycling

With so much uncertainty and disruption in the global supply chain, metal recycling is more important than ever. Recycling steel and aluminum saves energy, money, and resources compared to creating new materials. Using recycled steel and aluminum as raw materials in your manufacturing process can bring down your costs and allow you to keep your supply chain local, insulating your business operations from the global shipping crisis.

One of the most efficient ways to recycle steel and aluminum is by using remnant metal left over from large-scale manufacturing processes. These metal remnants are too small to be used for the operation they came from, but they can be easily reused by fabricators who need smaller pieces. Using steel and aluminum remnants avoids the raw material manufacturing process and simplifies the supply chain, reducing energy consumption and greenhouse gas emissions while keeping raw material costs down.

To ensure remnant metal is the appropriate grade and quality for your manufacturing process, look for remnants verified with technologies like x-ray fluorescence (XRF). This technology reveals the exact chemical composition of the remnants, letting you know exactly what you’re getting. You can use verified steel and aluminum remnants for your manufacturing operation with confidence in their quality.

Steel and Aluminum from a Trusted, Local Supplier

With steel and aluminum prices rising, it’s more important than ever to have a reliable, trustworthy metal supplier. Industrial Metal Service is a local metal recycler and supplier located in San Jose. We’ve been supplying new and verified remnant metal to manufacturers, fabricators, and machine shops in the San Francisco Bay Area and beyond for over two decades.

We stock an extensive inventory of verified steel and aluminum remnants in our San Jose warehouse, with both common and specialty alloys available. Our metal remnants are verified using Thermo-Fisher XRF analyzers to identify their composition and grade and assure our customers they’re receiving the quality they need.