In the last 2 years the steel industry has seen unprecedented challenges, we really are in unchartered territory, perhaps territory only chartered in WWII. Since 2020 steel prices have increased by more than 200% and the indications are very clear – there are more to come.
In the previous article forecasting for fluctuating steel price rises, we detailed what businesses might do to mitigate the risk of further rises in steel prices. However, the rises we have seen in the last 2 years could well be the tip of the iceberg as we are faced with even greater challenges coming out of Ukraine.
Crude Oil prices have seen a very sharp rise in the last week and many market analysts are predicting it will reach an unprecedented $200/barrel in the coming weeks. The cost of natural gas has reached record levels in the UK and with the announcement yesterday by the British and U.S. governments that they plan to boycott Russian energy imports; the impact on steel prices seems inevitable.
What is the likely impact for the UK construction sector?
As the war in Ukraine unfolds the impact could be even greater down the line, which means forecasting and budgeting for upcoming, and even ongoing, projects tricky. It seems reasonable to assume that the construction industry could well see a slow down as project plans get disrupted and budgets get squeezed. Many projects that are already started could well be impacted as contractors will be forced to pass on these unmanageable price increases.
While no one can predict the future – particularly in such challenging, even volatile, market conditions; what seems clear is that steel price increases seems inevitable. As we get clarity on the implications, we will keep you informed.
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