What’s Changed in the Materials Market for Manufacturers

Outlook for the Future from a Precision Metal Stamper’s View 

When I last wrote, we were experiencing much uncertainty in the industry: steel price increases, supply chain delays, workforce and transportation challenges, among the many factors we’ve been juggling these last few years. (Click here to read that article.) And much like last time, we still can’t predict with any certainty what, how, why, and when the markets, supply chain, and industry in general will settle into a pattern that we can “rely” on—whatever that means these days. After all, we are now facing a possible recession, with the national manufacturing rate’s slowest pace in over two years and the Federal Reserve increasing interest rates to control buying; a war in Europe that has worldwide implications (on many levels); along with many of the same factors that have us at this inflection point already. 

We want to provide an update on the materials market through the lens of current affairs and circumstancesMaterials market update larson tool & stamping so that we can provide context and understanding of where things stand now, and what we might hope to see, moving forward. And there is light at the end of the tunnel.

Pricing Has Improved 

One metric we track on a monthly and weekly basis is the CRU; the steel industry uses this pricing index. In August 2020, we had a low point of $437 per ton. We then went to a high point of $2,200/ton in October 2020. Not a typo—that’s almost a 6x increase! It is now hovering around $1,077/ton, which is still almost three times as high as August 2020, but lower. Please note that the CRU price is a base price before any extra charges or transportation costs are added by our service center. Most experts today feel we have reached the bottom and expect that there will be no more price erosion. The biggest domestic steel mill increased prices recently and the other three followed suit to set floor/ceiling prices. They can control that.  

Regarding the supply/demand equation—demand has decreased somewhat. The mills have planned some mill outages, which means they are trying to control the supply side of the equation. What that means, in conjunction with the price increase, is that prices will stabilize. However, they will not return to the lower prices in the $.35-.45 per pound range. Expectations for “inexpensive” pricing may be out of reach for a very long time—though a worldwide recession could force this, but that remains to be seen. We might settle in at a $.70-.80 per pound range.   

Service Centers 

All this talk of steel mills should be contextualized with this: all the material we buy are from service centers, not directly from the mills. This dynamic has an impact on our pricing. Some centers play the market. As an example, if a service center (SC) buys a high quantity of material to keep customers going, they might do so at a higher rate—which means they still need to offload material at this higher price.

 So, when we are buying from them, we might be buying at that higher rate—even though the current market rate is lower. They are bound to their pricing, and we are obligated to the price we contracted the material at and, in turn, to that price which we quoted to customers. We are, to a degree, at the mercy of the SC and how they manage their inventories. Scrambling to keep customers happy, it has been common practice for companies—many that normally practice just-in-time inventory management—to have overbought in the last couple of years. It’s so pervasive that this IndustryWeek article discusses several options for handling high inventory.

The volatility of supply and demand, having stainless steel (SS) mills exit the market, along with nickel prices rising, threw the market upside down. For a while, there was an inability to get materials at all. The SS market had initially anticipated that 2022 was going to be a very tight year (which it has been). They hoped to see it soften by the end of this year/beginning of next. In general, companies have shifted their material and capacity needs. Most of the suppliers over the last couple of months have shifted to an allocation system for the SC. There is an expectation that allocation will increase since there is more availability, though a major SS supplier is anticipating price increases for next year. Unfortunately, the stainless-steel market is still an unpredictable, mixed bag. It remains very volatile, depending on whom you talk to, and what the materials are.

Staying Stable 

The upswing here is that Larson still has tremendous buying power. During all this upheaval, we are proud to say that we did not shut down any customers. We have had delayed delivery because material was on barges, railcars, etc., but we are able to get the material through our vast network. We had to buy mill runs, versus small runs, but we ALWAYS had material committed for customers. This is still the case, but pricing is not yet stable. As mentioned previously, in some situations, we’ve bought material before it was made, at higher prices, and are committed to those prices—so when people ask why the (market) price decrease is not passed down to them, this is the mechanism at work.

European Conflict

The invasion of Ukraine has set off a host of tragic and far-reaching consequences—not the least, certainly, being the loss of life. Beyond that, there was a recent natural gas shortage, with the suspected sabotage of the Nord Stream pipelines. It has been stabilized, but this impacted steel mills in Belgium that had to scramble to get reserves so they could weather the situation.

Overall, the European market is in recession. The inflation rate in Europe is at a record high of 10%, and according to an article in Trading Economics, this marks the “fifth consecutive month of rising inflation, with prices showing no signs of peaking.” As one might imagine, production and pricing may impact the ability to get materials.


Yes, this is still a major issue. We recently averted a railroad strike, which would have brought the U.S. economy to a halt. This is one indication of how precarious our transportation infrastructure is.

The recap on transportation costs and challenges:

  • Rail prices have gone up
  • Rising freight costs—36% surcharges are applied to everything
  • Availability of trucks is still scarce
  • Fuel costs were up (now stabilizing)
  • Driver shortage is still an issue

 We talked about the driver situation in the last article. The truck drivers that remain active are still calling the shots. They continue to take the best paying job. We use brokers for some transportation needs, but they don’t always show up if they get a better-paying gig. The loyalty is not there, and we don’t see this improving.

The Outlook

 As expected, 2022 has been a challenging year, though we are cautiously optimistic from a materials and supply chain perspective, that improvement is on its way. And still, given all of these unpredictable variables, this year was a very good business year for Larson. Our production volume continues to increase, and we don’t see that declining anytime soon. Our workforce turnover was minimal; as well, we’ve even hired more people. Throughout this period, we have maintained our robust capital investment initiatives to keep us—and customers—on the edge of technological advances. Though material delays may still occur, our team here feels confident that we will have materials available to continue providing a quality product for customers. If we’ve learned one thing, it’s to never take our foot off the gas. It’s how we’ve done it for over 100 years – and still going strong. We’re grateful to all our customers for staying on this journey with us.

About Larson Tool & Stamping Company

Since its inception in 1920 in Attleboro, MA, Larson Tool & Stamping Company has been making a difference as a valued supplier of precision metal stampings and assemblies to hundreds of companies in the United States. Larson provides high-quality, cost-effective solutions with its wide range of capabilities that include forming, stamping, deep drawing, assembly, brazing, coining, and more. Through significant investment in leading-edge manufacturing equipment and the loyal support from customers and co-workers, Larson perpetuates the commitment made by its founders to do whatever is necessary to meet and exceed customer expectations.

 We are happy to answer any questions you have. Contact us at your convenience.