Finished costs soar as input costs & commodities ease
With soaring inflation, rapidly increasing interest rates, the energy crisis in Europe, and global economic fears, there are a number of factors impacting steel beyond base input costs. It’s important to understand the “why” behind what’s driving the current market, so you can better move your business forward.
WHAT’S AFFECTING THE MARKET?
Soaring Inflation: Prices paid by consumers increased sharply in June, faster than at any point in the last 4 decades. The main contributor was the skyrocketing price of energy, which has had broad reaching implications across the supply chain.
Rapidly Rising Interest Rates: After yet another hot inflation report, the Fed is again considering a historic interest rate hike in an attempt to cool soaring prices.
Recession Fears: Historic rate hikes, purposely meant to curb inflation and cool the economy, also threaten the stability of financial markets, with fears creating increased volatility.
Stronger Dollar: The European energy crisis, soaring inflation, and recession fears have pushed people into the “Safer” dollar. A stronger dollar pushes commodity prices lower.
WHAT NOT TO DO
Overreact: With cooling commodity prices, now is the time to secure materials and make investments. As costs of energy and consumer prices continue to rise, it will impact the cost of steel.
WHAT ARE WE WATCHING FOR
- Fed interest rate announcement later this month
- Impact of the slightly lower price of oil to start the month
- Core inflation numbers for July