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METAL STAMPING INSIGHTS

Latest tips, trends and best practices in the metal stamping industry

2022 Forecast for Metal Stamping Materials

Posted by Tim Lynch | 1/12/22 12:15 PM

The price of nearly every design and construction material or component you can imagine went through increases in 2021. Unfortunately, if you were looking for relief heading into 2022, you won’t find much in the metal stamping material sector.

The prices of metal stamping materials are forecast to rise throughout the new year continuously. There are many forces behind these increases, with no one area responsible for the higher costs. This article will examine the various factors driving these changes, the materials most likely to be affected, and dynamics altering availabilities and lead times.

If you’re in a position to be affected by the prices of metal stamping materials, all hope is not lost. We’ll also provide tips for metal stamping buyers to help your projects run smoother.

 

What’s Driving Price Hikes for Metal Stamping Materials?

You’d be hard-pressed to find one sole reason for the price increases of metal stamping materials. The following list outlines the multiple factors manifesting these drastic increases.

Labor Rates

Labor rates have increased nationwide. The high demand for houses, automobiles, and electronics has led to high demand for labor workers. However, there’s a shortage of willing Americans that are prepared to go to work. Because of this, a gap exists in the labor force. This leads to many labor workers having the ability to name their prices when offering their services.

Labor rates are expected to increase throughout 2022 continuously. With demand forecasted to increase, labor rates should follow suit.

Material Cost/Availability

The lackluster state of the supply chain has wreaked havoc among material prices in all industries. Metal stamping materials weren’t spared when these price increases kicked in nationwide. For example, steel increased from $.40/pound to $1.20/pound in 2021.

Unfortunately, prices may continue to climb in 2022. With limited inventory available, prices have nowhere to go but up.

Increased Demand

The World Steel Association (WSA) projects the steel demand will increase by 2.2% in 2022. In 2021, demand increased by a whopping 4.5%. Many other materials are likely to follow suit.

Effect on Tier 2 Suppliers

Tier 2 suppliers are affected by the availability and supply chain as well. These elements led to an increase of 45% from the previous year. Q1 of 2022 is expected to see more increases from steel and other metal suppliers.

Because steel is traded internationally, tier 2 suppliers feel the effects of exposed materials. However, China’s deceleration in steel-heavy sectors is resulting in a global decrease in demand. This could potentially swing things back in the right direction in Q2 or Q3 in 2022.

Out of all the elements listed above, limited availability and the supply chain may play the biggest role in price increases. The availability of certain materials and increased lead times will continue to be a factor throughout the new year.

 

Limited Availability and Increased Lead Times

Several metal stamping materials will increase in price in 2022. Forecasters predict a marked increase for a few materials, specifically. However, this doesn’t rule out increases in other areas for the metal stamping industry. The following materials are expected to be affected the most significantly.

Steel and Aluminum

Aluminum is expected to increase by around 6% in 2022. Currently, aluminum prices are hovering around $2,934 per ton. Predicted increases could put this metal well over the $3,000 per ton mark next year.

Although steel prices have leveled out, they still may approach $1.45 per pound during the first half of 2022. Lead times on steel are currently around the four-month mark.

Both of these metals’ availability and lead times are expected to remain high. The global demand, especially for steel, is depleting the available supply.

Red Metals

Red metals such as copper are in high demand, particularly for use in electric vehicles. The availability and price significantly affect Busbar projects that require large amounts of this metal stamping material.

The closing of several key mining operations in Chile because of COVID infections has been disastrous for the industry. Supplies are down as much as 20% because of these mining shutdowns.

Plating Materials

Nickel prices increased about 16% higher than normal in 2021. The end of the year will continue to bring long lead times and elevated prices.

However, many experts are expecting the price to drop globally in 2022. Despite the global price drop, availability may keep prices high in America as a result of supply chain issues.

With so much emphasis placed on supply chains affecting availability and lead times, many are left wondering what is driving these challenges. Let’s examine the most significant factors regarding increased lead times and availability.

 

What’s Causing Increased Lead Times?

At one point, lead times were hovering somewhere around a manageable six to eight weeks. However, many factors caused this number to balloon to four to six months.

These types of lead times have caused havoc on the metal stamping industry and other sectors. What is the driving force behind these mind-boggling lead times?

  • The supply can’t keep up with backlogs and heavily inflated increases in demand. When the supply doesn’t meet the demands, materials simply aren’t produced fast enough to keep prices down and lead times low.
  • Transitions to green energy, electric vehicles, and batteries have led to the volatility regarding copper. All of these elements, plus electrical grid updates, have led to the inflated demand for this soft metal. The constant need for large amounts of copper has led to high prices and atrocious lead times.
  • The devastating effects of COVID have played a significant role in the prices and lead times of metal stamping materials. Lockdowns and other restrictions led to many plants and mills shutting down around the world. Honestly, there just isn’t enough manpower to produce the number of materials needed globally.
  • Ocean freight issues, the overall state of the supply chain, and relations with certain foreign entities have affected the availability of many materials. Imports have become increasingly difficult throughout 2021 and continue to remain the same.
  • There are also challenges regarding the availability of shipping containers. With a lack of suitable transportation holders, shipping items across the sea consistently becomes a difficult task to accomplish.
  • Issues within the milling and trucking industries regarding capacity also present problems with supply availability. When the availability of trucks used to transport and ship freight declines and mills no longer have the personnel to accommodate larger orders due to demand.
  • Because of incredibly high demand and limited numbers of supplies, providers are placing limits on the number of products available for buyers. Recently, the cap has been set on buyers only having the option to purchase 60% of the total amount of the previous year. For all intents and purposes, this has the potential to cut their production and revenue in half.
  • Some mills have also closed their order books, leaving few options for purchasers of metal stamping materials when it comes to wholesale goods.

Where does this leave metal stamping buyers in terms of the future of their operations and projects? The following section outlines steps people involved with metal stamping materials can take to ensure things continue to run smoothly.

 

Remedies for Metal Stamping Material Price Increases

What are some potential options for individuals and organizations involved with metal stamping materials? There may not be a way to directly counter or offset inflated prices, but there are steps that can be taken to change the way business is approached.

Use the following methods and steps to better prepare yourself for the price increases and challenges surrounding metal stamping materials.

Adjust Schedules

Normally, anyone involved with the metal stamping industry is used to providing customers with 6-week turnaround times. This is nowhere near possible with the current backlogs and lead times. However, making changes to your scheduling and the way you prepare for and approach jobs can provide relief.

Schedule jobs far ahead of time to allow plenty of room for delays. Discuss this with customers, ensuring they understand the importance of seeking services far ahead of time. This will allow plenty of time to receive materials and plan for future jobs around delays and supply problems.

Allow Authorization for Manufacturers to Purchase Larger Quantity

Providing authorization for companies like Kenmode that manufacture metal stamping projects to purchase larger quantities for upcoming projects could be significant. By using the previous advice of planning ahead and making subsequent large volume purchases to accommodate these planned jobs, it may soften the blow dealt by delays.

Stay Up to Date

Staying up to date is one of the first steps in preparing for any major changes regarding metal stamping materials. It’s important to keep up with prices as well as information regarding lead times and availability. Additional information is available at Steel News and Metal Bulletin.

 

 

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Topics: Pricing, Materials