COVID-19 has impacted many industries, with some surprises and unpredicted effects. One of these surprise impacts is within the building industry. Regional property investment, increased demand for home renovations, and a dramatic increase in new home builds due to the effects of COVID-19 has seen an increased demand for steel.
Because of the pandemic, more people want to escape congested areas and harsh local lockdowns or increase the value of their homes through renovations.
This exodus from hotspots has had significant economic influence, raising building materials like timber and steel. In fact, timber has become so scarce that people turn to steel for their house frames, sheds, and garages.
Because of the rising demand for steel, its price has spiked dramatically. The increased steel costs mean that building companies have to pay premium prices and pass on the costs to homeowners, renovators, and homeowner-hopefuls looking to build properties.
Why are steel prices increasing?
The prices of important steel components have increased by 120% and continue to climb, making the creation and rolling of steel more costly. This demand for steel and its raw ingredients are causing prices to soar exponentially.
Globally, governments are investing heavily in infrastructure to recover from COVID-19, increasing pressure on iron ore (an important component of steel) and steel production.
Coking coal, another component, has also felt a surge in demand. Australia is the top supplier of coking coal globally, which would imply that our coal mines would benefit the most from this demand. And while this is true, because of the scarcity of material, its prices have swelled dramatically, even for Australians.
The economy has also bounced back significantly because of government efforts to keep it stable, causing more homeowners who wanted to renovate or homeowners-to-be to demand steel despite the tight supply.
Securing work for projects can also be difficult due to the high demand for steel and its subsequent shortage. This increased demand could result in further steel shortages or delays in building because of a lack of material. That leaves building companies to consider ways around cash flow, equipment costs, and payroll stress.
Will the cost of steel keep increasing?
Experts are predicting steel prices will continue to increase until at least 2023. There's a lot of pressure to acquire steel worldwide, which drives up the cost of components.
Building companies are bracing for further price hikes, too. This year alone saw steel prices rise on three separate occasions, with a predicted two or three additional price rises expected within the next 12 months. With a 30% increase and climbing, it doesn’t look like it will stop any time soon.
No one predicted this spike, causing building companies to jack up prices to make up for scant supply.
What to consider when investing in steel framing
It might be difficult to gauge whether or not the time is right to spend on steel framing, but if you’re willing to take the plunge, here are a few things to consider before investing in a steel garage or a steel-framed house:
Talk to local authorities, councils, or town planners to secure a permit.
Find a reputable shed company that can handle your construction requirements.
Be mindful that councils or town planners may require site plans
Check payment and delivery conditions to make sure everything is correct
Steel has been a hot commodity in construction due to its strength and reliability. Now people want steel more than ever, and demand has outweighed supply.
Please talk with us about how we can accommodate your steel-framed house or garage needs.