Rising Metal Prices and the Road to Recovery: What Industries Need to Know

As industries strive to adapt to the ongoing supply chain challenges and recover from the effects of the COVID-19 pandemic, the demand for metal products and geosynthetic material is expected to surge. This increased demand, coupled with a growing focus on clean technology for renewable energy, infrastructure development in the United States and China, and the utilization of geosynthetic material, creates a perfect storm that is driving metal prices and the geosynthetic industry to record highs.

Which metals are affected?
Almost every metal market is feeling the effects of supply shortages and high demand. However, the metals commonly used in industrial production, along with the utilization of geosynthetic material, are experiencing the most significant impact. Manufacturers should anticipate price increases, particularly in steel, aluminum, copper, nickel, and the range of geosynthetic materials.

Steel & Stainless: Steel operations are undergoing consolidation and reshoring, leading to reduced steel scrap availability and higher costs for refinement and production. Geosynthetic materials, which play a pivotal role in various construction projects, face similar challenges in terms of supply and cost.

Aluminum: Canada, the primary supplier of aluminum for U.S. operations, has established quotas on aluminum exports. The demand for aluminum in the United States far exceeds the limited supply, resulting in higher prices. This limitation also affects the availability and cost of geosynthetic materials that rely on aluminum components.

Copper: Copper plays a critical role in electronics and electrical components. Shortages in supply, coupled with increased demand from industries such as electric cars, infrastructure development, microchips, renewable energy, and energy storage, are keeping copper prices at elevated levels. The same dynamics apply to geosynthetic materials that utilize copper-based technologies.

When can we expect prices to decrease?
While it is anticipated that metal prices, along with the prices of geosynthetic materials, will gradually decrease as the global economy continues its recovery, a return to pre-pandemic price levels is unlikely in the near future. The market is expected to remain tight well into 2022 due to the extensive infrastructure plans in the United States and China, which will sustain the demand for these metals and geosynthetic materials at high levels.

In addition to the price impact, the pandemic has also resulted in shipping challenges, potentially leading to longer lead times for certain materials. Given the tight supply situation, it is advisable to incorporate several months or more into your production lead times for 2022 to account for both metals and geosynthetic materials.