Ask Dr. Steel: “What Dictates Stainless Steel Pricing?”
Much like any commodity, stainless steel pricing fluctuates depending on various supply and demand factors. Stainless steel is manufactured around the world and is a global commodity being imported and exported to various countries. High demand curves in one country can shift pricing based on supply curves in another. If you have priced stainless steel items such as tiles and beams for construction use you know that the price rarely stays the same month to month. In this article we'll examine some of the factors that dictate stainless steel pricing and how they affect the overall market for stainless steel production.
A major factor in stainless steel pricing is the cost of the alloy used in producing steel itself. Much like the price of oil affects the final price of gasoline; the cost of alloy has a direct effect on the final price of stainless steel. Alloy supplies fluctuate and are traded on an open market amongst commodity buyers. Often several countries may be competing for the same shipments of alloy and in turn that demand can drive prices up. In recent years the cost of the alloy has been at an all time low, but recent moves by several steel manufacturers across the globe have been aimed at raising the price of alloys to help support higher stainless steel prices.
Energy is another big factor is the production of stainless steel and therefore directly affects the final cost of manufacturing and has a significant weight when dictating pricing. With rising energy prices worldwide manufacturers are seeing increased costs in natural gas, coal and electricity prices. All of these items are necessary to manufacturer stainless steel and therefore a sharp increase in one can raise the price of stainless steel significantly. This effect can be likened to the price of gasoline rising and therefore the cost of food increasing as well. While gasoline is not a direct ingredient in good it is required for manufacturing and delivery. The same analogy holds true for stainless steel.
There are a limited number of stainless steel manufacturers and production plants worldwide. With an increasing demand for stainless steel the supply and demand curve kicks in. Only so much stainless steel gets produced each month and the greater the demand for it, the higher the manufacturers can charge. If a plant goes offline for maintenance or retooling that produces stainless steel the effect can be felt throughout the industry.
Nickel and Chromium, which are a big part of stainless steel production and help give the steel its hardness and anti-corrosion properties directly influence the pricing. The biggest factor out of the two is Nickel which is used in many industries. Recent trends show that nickel pricing continues to rise due to heavy demand and therefore it has had the affect of bringing up stainless steel prices with it.
There are also many other smaller, sometimes localized, factors that can effect stainless steel pricing . Distance from manufacturing facility or port where the steel is imported to. Local housing construction markets and availability of alternative resources for construction use can also affect local stainless steel pricing . All these items come together to dictate the final price for steel in your area. Much like the volatile gasoline market, stainless steel is also a ever-changing market depending on both raw material and man-made factors.