Every manufacturer that relies on an industrial metal supply must keep an eye on financial news that affects commodity prices, as they can have a major effect on your profit margins. Since we often work with original manufacturers, we’re familiar with the frustrations of industrial metal supply. Here’s an overview of the challenges that many companies experience.
Metal Mining’s Influence on Supply
In general, economic theories of supply and demand come into play with all commodities, including metals. The greater the demand, the more it will deplete supply, forcing prices up while lower demand creates a supply surplus and lowers the price. The supply of metal comes mainly from the metal mining industry.
Cost of labor is a huge factor that affects production costs in mining. Oil supply and demand is at the core of mining activity, as higher oil prices drive up the cost both of operations and transportation. Steel production is directly impacted by oil prices, whereas aluminum production is less so due to more widespread use.
The United States gets its metal supply from around the world, in addition to domestic supply. The U.S. ranks a distant #4 in global steel production, behind China, Japan and India. While the U.S. produced 78.5 million tons of steel in 2017, it was greatly outpaced by China’s 808.4 million tons. That year nearly a third of all steel used in the U.S. was imported from 85 other countries and territories. Only 2 percent of these imports came from China, while 16 percent came from Canada.
Government policies play a huge role in both the supply and demand for metals. The U.S. raised tariffs on imports in 2018 with the goal to boost domestic steel production and rely less on imports. Due to retaliation to this policy from Canada and Mexico, U.S. steel exports declined for the year to 7 percent, despite a 5 percent increase in production. The steel industry benefitted from the tariffs in its first year, as steel prices rose, but at the expense of supply chains.
Metal Processing and Manufacturing With Serra Laser
Serra Laser offers a wide variety of metal processing, able to handle industrial projects with large scale and custom specifications. Whether you need cutting, milling, drilling, or marking, we have the tools and expertise to give you a great turnaround time. Contact us for all your industrial metal processing needs here on our website, or give us a call at 714.680.6211. At our two locations in Anaheim and Sun Valley, California, we have the advanced tools and experience needed to make your project a success.