A complex combination of factors has caused the recent surge in U.S. steel prices, resulting in a domino effect on manufacturing costs in the aerospace sector. Current steel market prices are at their highest in three years, impacting rolled steel, as well as plate and coated steel products used in manufacturing.
U.S. hot-rolled coil (HRC) steel prices are currently at $1,275 per short ton, up 50% from a year ago. Tariffs, limited domestic supply, increased demand, cost-push inflation, and raw material costs are all driving higher prices. Section 232 tariffs are currently at 50 percent for steel and aluminum. The cost of raw materials like carbon and iron remain relatively stable, but some alloying elements can be volatile because of increased demand, resource locations, and specialized mining requirements.
The steel pricing landscape is complex and constantly in flux for a variety of reasons. Changes in demand for steel are due to a surge in a variety of projects like those for infrastructure and data centers. Other factors contributing to higher steel prices include increased costs for energy, transportation, and labor. Steel suppliers are raising prices to pass on increases in material costs, as well as to cover for those other heightened expenses.
Minimize Costs with the Right Aerospace Materials Supplier
While it’s impossible to predict what will happen with steel prices, they are likely to remain elevated. While planned seasonal outages usually align with lower demand, they are coming at a time when supplies are tight. Industry experts expect more than a million HRC short tons will be taken off the market during the outages.
As a manufacturer, there are some choices within your power. Choosing the right aerospace materials supplier will have an impact on your costs, material quality, and reliability of your supply chain. When considering a supplier, ask if they provide just-in-time delivery and keep a stockpile of some of the aerospace materials you need, including steel, aluminum extrusions, nickel, titanium sheets, plates, forgings, and bars. Find out what managed processing services they provide, including:
- Precision cutting
- Heat treatment
- Machining
- Materials testing
- Chem milling
- Shearing
- Trepanning
- Waterjet cutting
It’s also important to know how responsive and communicative your supplier will be. Do they work with customers on forecasting your needs so they can get you the best price? Look for a supplier that offers a variety of capabilities and can handle all your material needs.
Working with an Experienced Materials Partner
Rather than cutting steel costs through means like product redesign, you can minimize costs by planning ahead and ordering your stock early. An aerospace materials supplier like New Source Corporation can help you get the best pricing on steel and other materials.
Vendors that offer kitting and secondary processing can save on costs and time. New Source works with their partners and vast supply chain to kit steel items alongside their customers’ regularly scheduled aluminum extrusions. Not only does this lock in pricing for both items, but it saves costs on freight to package items together. New Source is able to access specialty materials and hold vendor-managed inventory of specialty alloys, such as Hy-Tuf bars and small-diameter A-286, for customer-specific programs.
These strategies not only minimize costs but ensure availability and tightens lead times. By planning ahead, customers know what they’ll be paying and when they’ll receive their materials.
Interested in how New Source can help your company? Let’s talk about how we can help with the materials you need. Contact us today.