Storage Talk with CEO Tom Rogers:
Steel, Western Pacific Storage Solutions and the current economy
February 24, 2021 3:08 pm
At WPSS, we seek to deliver streamlined, affordable storage solutions to our customers. Yet, sometimes unforeseeable market fluctuations can lead to price mark-ups and project delays, such as we are currently encountering with the volatile 2021 steel market.
When the pandemic hit in March of 2020, almost 30% of steel production was halted. After lockdown measures began to be lifted, the speedy industrial recovery and rising demand for steel commodities greatly outpaced the slow-to-restart global steelmaking capacity. This in turn lead to vast inventory shortages and skyrocketed steel prices, with many steel products seeing 45-100% increases in costs globally.
Western Pacific initially attempted to shoulder this financial burden for our customers, yet we could not endure the persistent price inflation. It thus is possible that our customers might experience some temporary inconveniences, such as surcharges on quotations for specific equipment and longer order lead-times.
Fortunately, these price spikes and inventory deficits might be shorter lived than anticipated. Steel mills have begun to ramp up production, with hot metal capacity seeing a significant increase since the fall. Economists are projecting that steel prices could even decrease to historical norms within the latter half of 2021. Yet, as we know, this pandemic is unpredictable, and there is no guarantee that steel production will not undergo more setbacks.
No matter what this year brings, we promise to continue to clearly communicate about price fluctuations and project delays, so we can find the most equitable solution for our customers. Together, we will persist through these hurdles.
Thank you for your patience. Please reach out to us if you have any questions.
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