The price of steel, which is one of the main components used in ship construction, has increased dramatically since early 2021. Shipyards continue to face mounting costs as build materials rise to record-high levels, including iron ore, which is hindering the agreement of new shipbuilding contracts as yards are having trouble calculating vessel construction costs. In the UK alone fabricated stainless steel prices jumped almost 75% between August 2020 and August 2021.
Supply is not only hampered by high demand and a shortage of the commodity, but also by a lack of delivery drivers and an increase in wages in the heavy goods vehicle industry, which has led to further increases in costs. Global travel restrictions preventing the movement of welders and steel workers has added another level of cost and complexity, with labour shortages, alongside steel shortages, currently the leading cause of project delays. If steel prices remain high or rise further, yards may even face financial losses on new shipbuilding contracts.
Hopefully over the next year we will see a return to a level of normality so that the price of materials begins to reduce once supply issues have been addressed.