2023 Budgets Should Reflect Declines in Metal Prices
- Most metal prices experienced considerable drops from price levels seen just a year ago. Indeed, excluding lead, all non-ferrous and ferrous metal prices appear considerably below price levels seen in 2021. Most suppliers continue to stay quest amidst this decline, opting to place the onus of cost reductions on procurement. That said, detailed should-cost models for semi-finished materials can help drive double-digit cost savings for carbon steel, aluminum, and stainless steel..
- 2023 will be the first in several years where metal prices will favor buying organizations over suppliers. This dynamic provides a meaningful opportunity for buying organizations to recoup funds from 2020-mid 2022 price increases. However, to reap these benefits, buying organizations will need to understand precise price drops. This applies not only to the exchange-traded portion of metal buys (e.g. ingot prices) but also to the price drops for many of the costlier elements that make up the total cost. Such elements include price drops for conversion premiums, freight rates, MW premiums, surcharges, and any other add-ons applied to products in rising markets.
- Every manufacturing organization that relies upon semi-finished metals or parts and components containing metal should see these cost-downs for 2023. This is true regardless of both industry and demand.
- In this post, we will explain the current metal market price trends. We’ll also explore what types of cost-savings you can expect for your semi-finished material spend.
Metal Prices Continue to Decline Across The Board
As you can see, metal prices are down substantially from just a year ago.
- Aluminum Ingot: 30%
- Aluminum MW Premiums: 18%
- Stainless Steel Spot Price (304): 32%
- Carbon Steel (CRC): 49%