3 Reasons Steel Prices Skyrocketed in 2020

Raw material prices for steel have increased about 60% from the pre-pandemic low in 2020. Prices in the US are forecasted to continue their upward trajectory through at least the first quarter of 2021, but are expected to soften by mid-year.  So what exactly happened?

  • Many businesses faced unplanned shutdowns due to the COVID-19 pandemic, and steel mills were quick to idle furnaces and curtail production instead of risking uncertainty
  • A resurgence in demand in the last months of 2020 while supply and inventory was low drove a rapid escalation in prices, which were further complicated by a raw material scrap shortage
  • Steel mills have aggressively raised prices to take advantage of the shortage, with benchmarks like cold rolled steel coil up 100% in 90 days

Additional capacity is expected to come onto the market in 2021 that will ultimately provide relief, but it’s uncertain when this might happen and how much prices may continue to climb before then. Many of the factors that started driving steel prices higher in 2020 are still at play as we enter 2021, and demand for steel is forecasted to grow by 6.7% in North America this year as the economy rebounds.  Whether prices start to level out in Q2 or H2 of 2021 appears to be largely dictated by the mills, their utilization rates, and what profit margins they want to make while they’re holding all the chips.

What drove steel prices higher in 2020?  Steel production capacity was significantly reduced through 2020 as already slowing demand nearly stopped due to uncertainty in the global economy, and many factories were forced to pause operations during the global Covid-19 health pandemic.  Mills that were able to stay open and operating focused on their larger contract orders, pushing price increases and lead times for smaller customers and leading to a shortage in scrap.

Cold Rolled Coil Steel Prices as of Jan 25, 2021

Many feel that mills have been more aggressive than needed with prices increases and are taking advantage of this supply shortage to pad their margins while demand is strong.  Mills are continuing to hold on aggressive pricing in 2021 and only offering discounts on large volumes.  Lourenco Goncalves, President and CEO of Cleveland-Cliffs, said this of his philosophy regarding mill production: “I have said time and time again that I am for value, not for volume.”  Make hay while the sun shines, as they say.

“Cleveland-Cliffs Northshore Mining – Silver Bay, Minnesota” by Tony Webster is licensed with CC BY-SA 2.0

But the pandemic wasn’t the only thing in 2020 affecting steel.  Transportation costs increased as steel competes for domestic trucking capacity with many other industries that were seeing a surge in demand including lumber products and ATVs.  The price of nickel has also been soaring under tight supply and increasing demand.  Though typically under 20% of the composition of stainless steel, nickel may soon be three times the price of chromium per ton making it the largest cost component in many cases.  Section 232 Tariff on imported nickel is causing uncertainty on decisions to buy foreign nickel with a 3 – 5 month lead time.  Canadian steelmaker Stelco suffered an operations-impacting cyber attack. Pittsburgh-based Allegheny Technologies Incorporated, previously one of the big three, announced they would exit the stainless steel sheet market by mid-2021, opting to shed it in favor of optimizing operations for higher margin business.  And in the last quarter of 2020, we saw signs of life as demand starts to pick back up.  So now we have supply shortages and excess demand where we before had excess capacity and declining demand.

It appears as though we’ll face some other headwinds into 2021 as well.  The Biden administration has highlighted many priorities for the year, and this does not appear to include swift reversal of tariffs or import restrictions.  The Covid-19 pandemic continues to impact supply chains around the world.  Even China, which has recovered more quickly than much of the world has had to implement new lockdown measures after a wave of cases in the Hebei region, which contributes over 20% to the country’s output of steel. Deliveries by truck have been suspended leaving only rail for transportation, and mills are hesitant to tie up cash during a soft lockdown leading to delays and shortages.  Furthermore, demand for nickel isn’t expected to decrease anytime soon, as it’s an important component in nearly every type of electric vehicle battery.  Global demand for nickel specifically for use in EV batteries is expected to grow from 60,000 metric tons in 2018 to some 665,000 tons (an 11x increase) in 2025.

It’s difficult to say exactly when the supply chain will catch up and prices will level off, but according to the American Iron and Steel Institute we should be able to meet demand with current capability.  In the week ending on January 16, 2021, domestic raw steel production was 1,738,000 net tons, representing a capability utilization rate of 76.7 percent.  That’s still quite a bit lower than the 82.4 percent capability utilization rate for the same week in 2020.  Only once the vaccine is fully rolled out in the US and factories are back to operating at pre-pandemic levels will we see the end result of the myriad of factors driving this steep increase in steel.

3D Printing Metal: The Advantages of Direct Metal Laser Sintering

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Did you know that metal parts can be 3D printed? It happens via a process called Digital Metal Laser Sintering or DMLS. DMLS is a form of additive manufacturing that uses metal powders and precision lasers to create the desired part. The technology operates on the basis of a 3D CAD file which specifies how complex a design should be.

So, how exactly does DMLS printing work? What happens is this: a thin layer of metal powder is evenly distributed across the bed of the printer. By following a CAD file, a precision laser sinters (heats and fuses) the metal powder particles to replicate the specified design. This process is repeated with additional layers of metal powder until the desired shape and size is achieved. In essence, parts are produced one metal cross section at a time.

Now that you know how DMLS works, let’s have a look at some of its advantages:

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5 Things You Didn’t Know About the Metal Fabrication Process

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Basic metal fabrication involves the forming, shaping, or joining of metal. Typically, this happens through deforming or removing some portions of the raw material.

To many, metal fabrication may seem like a simple one or two step process. But the fact of the matter is, it’s much more detailed and comprehensive than simply pulling metal pieces off the inventory shelf. Here we’ll explore different aspects of metal fabrication to help you be more informed the next time you need to rely on the services of a fabricator:

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The Future of Manufacturing: Are We in the Midst of a Robot Takeover?

Robots often get a bad rap. Sci-fi novels and films have painted them as evildoers looking to take over our lives and our jobs. Pundits and politicians have largely done the same. But today’s innovative technology is proving that quite the opposite is true. Not only are robots creating jobs but they’re also making existing jobs more convenient. And, to top it all off, they work side-by-side with humans in a relatively peaceable manner.

They’re helping manufacturers turn bigger profits and making operations more efficient. They’re powerhouse machines that can work hour after hour without fatiguing to the point of needing a break. They don’t require salaries or benefits which prompts manufacturers to allocate money for other uses–such as hiring a robot operator or maintenance technician.

And because these machines can do repetitive tasks endlessly with a high degree of accuracy, they boost employees’ productivity in other areas that require a human touch.

Simply put: Robots act as a cost-effective and complementary component on the warehouse floor which makes for a higher quality product that consumers are compelled to by.

Types of Robots

While entertainment of the Sci-fi variety has conditioned us to believe that most or all robots take on human-like forms, the reality is that in manufacturing this simply isn’t true. Sure, some have arms and even “eyes” but for the most part, industrial robots are just…well, machines that help people get stuff done.

Here’s a look at some of the robot types on warehouse floors today:

  1. Cartesian Robots:  Typically used in the automotive and auto component industries, Cartesian robots are noted for their linear movement and ability to move and carry heavy loads. Manufacturers rely on them for accuracy and repeatability when cutting drilling, stamping, or welding materials. Because of their versatility, especially in metal fabrication operations, these robots are gaining popularity in the metal and food/beverage packaging industries.
  2. Articulated Robots:  Articulated robots are distinctly different than Cartesian robots in that they use rotating movement to achieve a full range of motion. They’re most often used in the automotive industry for assembling and material handling but they can also be used for welding, picking, cutting, and spraying materials.
  3. SCARA Robots:  Selective Compliance Assembly Robot Arms or SCARA robots have a parallel axis joint that acts as an arm and are used to for assembly, pick and place, and loading/unloading operations. In comparison to Cartesian robots, SCARA robots are cleaner and faster and more suited to high speed assembly. They’re often used in the automotive, electrical, and electronics industries.

Companies Making a Splash in Robotics

Many companies have happily adopted robotics as a key component in their business strategy. These are just a few:

1. Amazon Robotics LLC

Formerly known as Kiva Systems and acquired by Amazon in 2012, Amazon Robotics LLC uses robots to provide smarter, faster, and more consistent customer service. The robots, which move autonomously around the warehouse floor, are used to make warehousing operations like picking and packing quicker, easier, and more efficient all around.

While Amazon has no plans to share the technology with competitors, the Kiva Systems acquisition opened up a world of robotics possibilities for other companies to explore.

2. Kuka Robotics

Kuka Robotics produces a number of industrial robots designed specifically to aid manufacturers in production. Kuka strives to customize a manufacturer’s robotics experience by tailor-making robots to a specific need. Altogether, there are eight types of Kuka robots:

  • Six axis robots
  • Welding
  • Cleanroom
  • Shelf-mounted
  • Palletizers
  • Heat-resistant
  • Press-to-press
  • High accuracy

Each one comes equipped with a dependable, programmable PC-based system that manufacturers can use to streamline their production processes.

3. Rethink Robotics  

Rethink Robotics provides manufacturers with robots that can easily adapt to real world variability. Using embedded cameras that work as “eyes,” these robots–called Baxter and Sawyer–can change applications quickly as well as ‘feel’ their way through any task. As such, they can perform a wide variety of tasks and work around obstacles that may hinder progress on a job.

All in all, technology has advanced to the point where industrial robots can be an asset to manufacturing companies. While robots are changing the way companies do business, they are largely acting as collaborators that can work side-by-side with humans to help meet or exceed goals. This isn’t a bad thing. In fact, it should be embraced as a mark of progress that helps companies and workers alike expand their knowledge of industry and the possibilities that lie ahead.

 

Job Training Programs: How 4 Companies are Closing the Manufacturing Skills Gap

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Over the next decade, an estimated 3.4 million jobs will need to be filled in the manufacturing sector. The problem? Candidates with the right skills to fill those positions will be few and far between.

To close this skills gap, these four companies are taking matters into their own hands:

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Is New Technology Fueling the New-Shoring Trend?

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Innovations in technology are making it easier than ever to manufacture products right here at home. From 3D printing and computer aided design to the Internet of Things and data analytics, modern technology is transforming the way manufacturers think and create.

But something else is transforming, too: production. While many established companies have chosen to produce goods in lands far and away over the years, newly launched start-ups and independent manufacturers are using innovative technologies to keep production all American. This trend, called new-shoring, started to pick up just a few years ago and is now a way of business for many manufacturing newcomers.

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The Importance of Data in Manufacturing

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In one way or another, we’re all bound by some type of data. Whether it’s the Internet-based data you can use on smart gadgets or the kind that measures and tracks important information, the concept of ‘data’ is now an intrinsic part of our lives. And no one knows this better than manufacturers.

Today, manufacturers use both types of data to produce quality goods. Not only do they use informational data to make thoughtful business decisions, but they also use the Internet kind of data to streamline their processes.

Here’s how collecting or using even just a little bit of data makes a huge impact on manufacturing:

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6 Smart Manufacturing Terms You Need to Know

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Smart manufacturing is taking the world by storm. In fact, some experts believe that smart manufacturing is ushering in a fourth Industrial Revolution. But what exactly is smart manufacturing and how does it affect you?

Smart manufacturing involves fully integrated and collaborative manufacturing systems that can respond in real time to the obstacles or challenges faced by the factory. These so-called smart machines process data and analytics to streamline production. They’re also better equipped to respond to customer demands as well as reduce the risk of product failures and safety issues on the plant floor.

If you’re new to the concept of smart manufacturing or simply need a refresher, here are six relevant terms to know:

  • smart-watch-821571_1920Internet of Things: The Internet of Things, or IoT, is a network of devices, machines, buildings, and equipment that can digitally exchange data and information. The Internet of Things enables remote accessibility throughout the network, allowing each device connected to that network to communicate without manual interference. This network can include computers, manufacturing equipment, and mobile devices.
  • Machine-to-Machine (M2M): The concept of Machine-to-Machine is very similar the Internet of Things in that it offers remote access to machines. But that’s really all it does. M2M provides access to machine data and is typically used for monitoring the performance of machines rather than interconnectivity and collaboration for the purpose of improving business operations.
  • Cloud Computing: It’s the digital age, so it should come as no surprise that today’s manufacturing equipment can access ‘The Cloud’ and perform what is known as Cloud Computing. While cloud computing may sound like a mysterious and abstract concept, it’s simply a fancy way of saying that machines and devices can access data that is stored on the internet. What makes cloud computing useful in manufacturing is that internet-based data is shared and accessible by all machines on an on-demand basis.  
  • Preventive Maintenance: Preventive maintenance is an ongoing, planned process that follows guidelines for inspecting, detecting, and correcting equipment failure. The aim of preventive maintenance is to eliminate unnecessary inspections and maintenance tasks. Since it doesn’t leave anything to chance, manufacturers who practice preventive maintenance can count on reductions in unplanned downtime and maintenances costs.
  • person-731479_1280Predictive Analytics: Predictive analytics looks at the history of machine failures to predict future equipment issues. This automated process, which compares machine sensor data to spot potential problems, provides manufacturers with the insight they need to better anticipate maintenance and productivity issues.
  • STEM: In order for manufacturers to be able to compete, they’ll need to hire candidates who are equipped with Science, Technology, Engineering, and Math (STEM) skills. While these skills are necessary and relevant right now, they’ll become absolutely essential in the coming years. Candidates who excel in STEM related disciplines will be able to effortlessly slip into a manufacturing role and propel company goals forward.

Just-in-Time Manufacturing: How It Differs from Lean

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If you’re familiar with the landscape of today’s manufacturing industry, you’ve likely heard of lean manufacturing. But have you heard of its relative, Just-In-Time Manufacturing? To many in the industry, Just-In-Time or JIT manufacturing and lean seem to be one and the same. But these two manufacturing philosophies actually do have some differences. And here, we’ll explain them in detail.

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