There is no argument that over the past 18 months we have all been faced with challenges from an individual to a global community level. As we look back on just 2021 alone, our North American industry has seen several price increases that can be quite challenging. This report was written in an effort to help our customers understand these circumstances within the metal sectors a bit better.

Metal prices are currently at an all-time decade high, outperforming agricultural and energy commodities during the pandemic. Across the board prices have increased by over 72% relative to their pre-pandemic levels. Increases have been broad-based across industrial metals including copper up 89% in May (year-over-year), iron ore up 116%, and nickel is up 41%.

What is driving up metal prices much more than other commodities? Here are just three key factors:


During the early months of the 2020 shutdowns, many steel mills shut off production in fear that we were headed into a deep recession—maybe even a depression. But that drop-off in demand didn’t last long. A rather dramatic increase in demand led by the automotive industry, and consumption by stuck at home Americans of everything from aluminum can beverages to purchasing grills and refrigerators, has caught steel mills off-guard. Some pandemic-spurred trends, like lumber and steel intensive do-it-yourself home remodeling, are slowing down. However, unlike wood products, steel is less dependent on DIY or new home construction. In fact, many industries that are steel heavy, like oil and gas, are seeing their steel demand soar right now as the economy reopens and oil becomes higher demand. Oil producers and refineries will only need more steel in the coming months as Americans return to air travel and their daily commutes. A direct correlation of this is shown in recent oil prices now 85% higher than they were just one year ago. When combined with slow mill restarts and historically low starting inventory levels held by service centers, it is pushing local mills to maximum capacity.


With exceptionally limited options available domestically, several buyers have increased purchasing volumes from overseas suppliers. However, imports are still being hampered by poor container availability and historically high shipping costs. Freight rates for the transportation of bulk materials reached a ten-year high due to congestion in key ports, quarantine restrictions, ongoing problems staffing shipping crews, and a rebound in fuel prices from the deep troughs in Spring 2020. This all added to the cost of metals. Ocean freight rates are now 450% higher than they were in just February of this year, and continue to trend in the same direction.


“Ocean freight rates are now 450% higher than they were in just February of this year, and continue to trend in the same direction.”


Let’s not forget about the U.S.A. imposed tariffs on steel and aluminum which started in March of 2018 introduced to almost every country in the world, in an effort to rejuvenate the local steel industry. The tariffs which started on steel and aluminum, have now been expanded to cover by-products like nails, tacks, staples, cables, certain types of wire, bumpers and other parts for cars and tractors. Some countries are now seeing tariffs as high as 170% on related products. These factors have fueled the rise of raw material costs, which has driven the rise of costs to finished goods. Based on 2020 import levels, these tariffs currently impact over $410 billion of imports and exports and increase consumer costs by roughly $51 billion annually.

While tariffs were supposed to re-inject life to the steel industry, many other challenges have settled in including trade wars and higher competition from foreign entities. In all, economists have estimated, the trade war had caused a net loss of 175,000 U.S. manufacturing jobs by mid-2019.

United States Steel Corp. said in late July that it had no plans to restart a second blast furnace at its Granite City, Ill., mill that stopped in the spring of 2020. U.S. Steel and Cleveland-Cliffs Inc., another steelmaker, have taken about 7 million tons of steel production capacity out of service since the pandemic started last year according to analysts’ calculations. That amounted to about 12% of domestic steel consumption in 2019. It seems these factors have only compounded the supply demand issue driven by tariffs.

What’s on the horizon?

This is a challenging question. While some analysts expected to see a peak by now, things do not look like they will be dropping anytime soon given the trending imbalance of supply and demand. A fast energy transition, for example, could require a 40-fold increase in the consumption of lithium for electric cars and renewables, while the consumption of graphite, cobalt, and nickel for these purposes may rise around 20 to 25 times according to the International Energy Agency. This would exacerbate imbalance of steel and aluminum supply demand.

On the flip side, prices may decrease more than expected if legislative approval and government actions required for the energy transition and infrastructure programs do not materialize as expected.

“In summary, we may not see a light at the end of this tunnel on the immediate horizon, but are optimistic things will eventually stabilize.”

About 9 million tons of annual sheet-steel capacity is also being added to the U.S. market over the next couple of years. That equates to about 15% of annual domestic sheet-steel consumption. The new, efficient mills are expected to push down steel prices with their lower operating costs, drawing customers away from older, high-cost mills that need higher steel prices to remain profitable.

In summary, we may not see a light at the end of this tunnel on the immediate horizon but are optimistic things will eventually stabilize. For now, the severe shortage of material in the market continues to drive prices upwards.

What can our customers do?

While you can rest assure Ideal Products is putting extra resources into things like expanding long-term forecasting, working more closely with logistic and freight companies, and collaborating with vendors to build our strategic channels of raw material supply, here are a few things we encourage our customers to consider:

Plan ahead, and give yourself some extra time to look at your forecasting and plan at least a month earlier than usual. Consider making purchases now in order to try and secure lower pricing.

Consider using premium products and/or substitutions. Many of our products have similar if not better performance and can provide similar results.

Optimize your shipments with bulk order sizes to reduce congestion.

As soon as new information or changes arise on project schedules, plans, forecasting, etc., let us know as soon as possible.

As we continue to face unprecedented challenges, we truly appreciate the commitment and collaboration of overcoming these various hurdles together. We thank all our direct and indirect customers for allowing us a place to serve you and your team.

While some things may seem grim, the future does look promising. We just need to be as patient as we are creative with solutions in the meantime.

Please feel free to reach out to your Ideal Products representative for more ideas and support on how we can get through this together.

If you would like a digital or print-ready PDF copy of this report please contact your local representative. Thank you.