Steel fabricators warn of price hikes, delivery delays
A year in, and the effects of the COVID-19 pandemic on construction supply chains continue to be felt.
The latest industry to be hit hard—in the form of shortages and delivery delays—is steel. Prices for flat-rolled steel, which were anticipated to have peaked in October, continued to rise through the fourth quarter of 2020 and again in the early weeks of 2021. What’s more, fabricators are warning that a normal two- to three-week lead time has been extended to one or two months.
“This is worse than the market spike we saw in 2003. Prices keep going up, and we can’t even see the ceiling at the moment,” says Gord Rados, executive director of the Ontario Structural Steel Fabricators Association (OSSFA). “We’ve seen prices increase weekly—sometimes even twice a week since the fourth quarter of last year.”
Rados says the price for hollow structural section has doubled in the past two months, while the price of structural beams is close to doubling since the beginning of the year.
The association issued a letter to members and to the broader construction community on January 22 in which it warned of price increases and delivery delays that are outside the control of the province’s producers.
For example, says Rados, a typical price guarantee provided to warehouses from mills on firm orders is usually 30 days. Some mills have shortened that period to 21 days; others have cancelled outright. That means that fabricators—and contractors by extension—can expect to see prices rise two or more times over the time it takes to get a steel order rolled and delivered.
Delivery dates are also suffering. The OSSFA note to members advices that mills are no longer guaranteeing delivery schedules until weeks after orders are placed.
“We’re all in a really difficult situation,” says Rados. “The price changes and delivery schedules are entire out of our members’ hands. We’re doing what we can to make the industry aware of the fact that we’re unable to provide firm pricing, and project delivery dates will be affected.”
A variety of issues are complicating market conditions. Demand is one. As lockdowns lifted throughout North America last spring, business began ramping up, and mills were unable to keep up with production. Supply, as a result, suffered.
The mills themselves have been no strangers to challenges of their own. The pandemic has played havoc with workforces, while some producers have also been hit by cyberattacks and labour unrest.
Meanwhile, the global price of iron ore—one of steel’s key raw materials—increased by 50 percent between April and November.
Experts expect steel prices will remain high through the first quarter of 2021. After that—and especially as the construction season across most of North America moves into full swing—who knows?