The market for raw materials is always changing and these movements in price are driven by a number of different factors. While President Trump’s tariffs on aluminum and steel is a much-publicized driver of market prices, as well as his trade negotiations with countries around the world, there are a number of other factors that drive the current pricing of steel and the Roller Die team pays attention to them all.
The first factor that determines the price of any raw material is the actual cost to produce that material. Steel is comprised of iron ore or scrap metal. The price for iron ore is driven by the price of mining and transportation, which means the labor market, local weather conditions, and the location of the mine will play a major role in the cost to extract it from the ground. Scrap metal, meanwhile, is dependent on the availability of old material from projects that are being dismantled.
Transportation of steel is perhaps the biggest driver of cost because transportation requires oil and the cost of gas to move the steel from the mine to the next facility fluctuates due to supply and geopolitical changes. Indeed, if you look at the prices of steel and oil over time, you’ll find they’re closely related.
Supply and demand plays out in the market for steel and aluminum as, when the economy is booming, the demand for steel parts rises and so does the price of steel. Even if a mining company is able to increase the supply, that can take time. Trends in the use of materials in different industries will also drive the price of materials such as steel and aluminum. A strong auto industry, for example, will be using more of the available steel supply.
The team at Roller Die + Forming pays attention to national and international news that can impact these prices. While we can’t control the market for steel, we can help advise clients on ways to minimize the cost of raw materials so that the price of their finished part remains competitive. Reach out to one of our experience sales professionals to learn more about how Roller Die can help you.