KRYTON Metals Blog

What To Expect From Steel Prices and Lead Times in 2022

CNC machining predictions are full of good news this year. In 2021, the cost of American steel was at an all-time high. But 2022 looks more promising with lower steel prices and better lead times. And steel production is booming as a result. 

So, will the price of metal fabrication continue to decline, or is the drop only temporary? Moreover, will the supply chain disruptions affect lead times and manufacturing processes? These questions are crucial for an economy on the other side of a pandemic. 

Will Steel Prices Continue to Rise?

Most likely, steel production prices will steadily decrease in 2022. As the average American fabrication shop becomes more familiar with advanced machining methods, their precision increases ten-fold. Better laser cutting means less waste. Then less waste helps cut costs and shorten lead times even further.

Shorter lead times can make the economy more competitive. And talk of gradual price drops helps encourage innovation. Together, those two trends may turn the tides in the CNC machining arena. But it might take well into the third quarter for anyone to tell. That’s because the measurable decline still has time to change direction. 

 

American Steel Prices in 2021 vs. 2022  

So far, the price of stainless steel and metal fabrication is significantly lower than in 2021. Last year, metals manufacturing costs were about 5-10 percent higher. But OPEC is suddenly aiming to increase its output starting no later than February 2022. And many manufacturers are curtailing production overseas, bringing CNC facilities back to American shores. 

The trio of events has yet to put American steel prices back where they were before the COVID-19 pandemic. Thus, stainless steel prices remain relatively high. However, the average cost of metal fabrication started dipping at the end of 2021. Meanwhile, U.S. hot-rolled coil closed 8.3% lower in the first month of 2022. And cold rolled coil fell 3.2% simultaneously. 

 

What the American Fabrication Shop Can Expect in 2022 

The average American metal fabricator can expect several twists and turns in 12 months. Not only will steel prices fluctuate, but the market volatility could affect lead times. Fabrication shops that cannot begin orders because of cost discrepancies may fail to meet company objectives. And their reputations in the industry could suffer as a result. 

U.S. steel manufacturers and manufacturers with metal fabrication projects in the pipeline, as a result, should expect the unexpected during the first half of 2022. The economy needs time to level, but savvy fabricators think ahead. With steel prices declining for the first time in many years, buying surplus raw materials is a wise investment. CNC machine shops competing for business must fortify their efforts with preparation and efficient improvements. 

In the meantime, brace yourself for these three probable trends: 

 

#1. China to Curb Steel Production 

China’s steel market is the largest in the world. Yet, the quality of Chinese steel doesn’t always meet American standards. But China’s recent efforts to cut carbon emissions could help put American metal fabrication back at the top. So, expect a demand increase in the coming months. 

#2. Mixed Views 

Some manufacturers will feel the pressure of supply chain disruptions as global economies shift. So, you’ll likely hear opinions on both sides of the equation. However, steel fabricators that can prepare for longer lead times will have a better chance of survival.  

#3. Steel Market Growth 

Raw materials like stainless steel and aluminum are in high demand. The construction, automotive, and infrastructure industries are especially reliant. Meanwhile, the IEA predicts steel to grow by at least 1/3 by 2050. That means now is a good time to invest in surplus. 

 

American steel fabricators have a long haul ahead, with a mixed bag of opinions and predictions. But since it's challenging to prepare for the unpredictable, the best option is to find cost-effective alternatives for protecting crucial manufacturing processes. 

 

DID YOU KNOW: The EU recently eased partial tariffs on sheet metal and other raw materials coming from European manufacturers. 

 

Cost-Effective Alternatives for Beating Supply Chain Disruptions 

Supply chain disruptions can affect every aspect of metal fabrication. Whether the issues stem from shrinking global production or lacking American preparedness is consequential. However, it’s better to be proactive than reactive when managing sheet metal supply and demand. 

 

Consider a fabrication shop with a large inventory of stainless steel, aluminum, and other raw materials. Find one capable of laser cutting and cost-effective metal machining. And look for ISO certifications to enjoy reliable precision with manageable lead times. Also, remember to get your projects slotted sooner rather than later. The American steel industry is still volatile. It’s important to act now, even for projects with deadlines in Q3 or Q4. 

 

Prepare for the Unexpected with KRYTON Engineered Metals 

KRYTON is the recipient of the 2021 CFU Employer’s Choice Award for Energy Conservation. Our streamlined manufacturing processes help fabrication shops cut costs and shorten lead times. Start projects with peace of mind and quality raw materials. Reach out to our expert team or get a service quote today.

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