What affects steel prices in Ireland?

If you've been selling or buying steel for any length of time, you've likely been perplexed by the sudden and seemingly arbitrary price changes. Steel is a commodity, and therefore, its price is subject to the ever-changing whims of the market. In this blog, we're going to take a detailed look at what factors affect the price of steel in an effort to make sure you get the best price for your steel and that you have the knowledge to buy at the best time possible.

Ireland's steel prices are notoriously volatile. We saw dramatic spikes following global supply chain issues from 2020, with some reports noting increases of over 100% for certain types of steel beams between 2020 and early 2022. While there have been periods of stabilisation and even decline since those peaks, the market remains dynamic and influenced by a complex interplay of global and local factors.

 

What Pushes Steel Prices Up?

Raw Material Costs: Steel production relies heavily on iron ore, coal, and recycled scrap metal. Fluctuations in the price and availability of these essential inputs directly impact the final cost of steel products. When demand for raw materials is high, or supply is constrained, prices rise. (Oran Metal Group plays a key role in the scrap metal ecosystem and contributes to this supply chain).

Energy Prices: Steel manufacturing is an energy-intensive process. Increases in global energy costs, whether for electricity or natural gas, significantly inflate production expenses, which are often passed on to the consumer.

Global Demand & Economic Growth: A thriving global economy generally means increased construction, manufacturing, infrastructure development (like pipelines and renewable energy projects), and consumer goods production – all of which consume large amounts of steel. Strong demand, especially from major economies, pulls prices upward.

Supply Chain Issues: As seen during the COVID-19 pandemic, disruptions to global shipping, logistics, and production capacity can create bottlenecks, reduce supply, and drive up costs. Geopolitical events, like conflicts or trade disputes, can also severely impact supply chains. Rising shipping costs remain a factor.

What Can Cause Steel Prices to Fall?

Economic Slowdown: When global economic activity cools, demand for steel in construction, manufacturing, and infrastructure naturally decreases. A significant slowdown, particularly in major steel-consuming regions like China, can lead to oversupply and put downward pressure on prices.

Increased Supply/Capacity: If steel production outpaces demand or if new production capacity comes online, the resulting surplus can lead to price reductions as suppliers compete for buyers.

Falling Input Costs: Reductions in the price of key raw materials like iron ore or scrap metal, or significant decreases in energy costs, can lower production expenses and potentially lead to lower steel prices.

Stabilisation of Supply Chains: The associated cost pressures can lessen as global logistics normalise and disruptions ease.

Market Competition: A highly competitive market among steel suppliers and distributors can lead to more aggressive pricing strategies to gain market share.

The above is just an introduction to Ireland's steel prices. For more direct advice, please get in touch with our offices today