Cost factors in steel construction – how much does a kg of steel construction cost in 2023?

What are typical? Prices for one kilogram of steel construction? What are the Cost factors and what influence does it have? Manufacturing location one contract manufacturer on the prices of welded steel structures and steel components?

These questions are essential for buyers of mechanical and plant engineering companies when setting up their supply chain. The answer to this is highly individual and depends on many different factors.

We'll show you when Low cost country sourcing worth ordering from Location advantages to benefit and how to become one meaningful price comparison for steel structures.

What are the most important cost factors in steel construction?

To put it simply, the producer prices for steel construction are mainly set ex works four cost factors together:

• Material costs (costs for raw materials such as plates, supports, steel profiles or pipes, as well as auxiliary materials such as welding electrodes or grinding wheels)
• Labor costs (labor costs for cutting, welding, setting up, preserving and assembling the parts)
• Administration costs and profit (building costs, quality assurance, sales, payroll, sales costs, taxes, etc.)
• External costs (galvanizing, powder coating, other surface or heat treatment)

In addition, purchasing still has to internal expenses for the Supplier support on site, as well as the Delivery costs in order to arrive at a meaningful overall cost comparison.

Steel prices and material costs

The Steel prices have been relatively constant and homogeneous in the past. However, since the outbreak of the Corona pandemic, this has changed and prices are extremely volatile. With the start of the Ukraine conflict, the uncertainty has increased even further.

Since then, material procurement has played a crucial role. Suppliers with cheap sources of supply, e.g Steel construction companies from Turkey, have decisive location advantages.

Transport costs and material availability also have an influence here, so that manufacturing companies in the vicinity of inexpensive steel producers or dealers have slight cost advantages. Rare material qualities or raw materials are often more expensive in smaller countries. For coarse steel construction with high wall thicknesses and few processing steps, the material costs have a greater influence than with light steel construction with thin sheet thicknesses and more complex structures.

The component weight plays a smaller role here and contributes less to the overall costs. Je less standardized the semi-finished products used such as sheets, profiles or pipes, the more important it is, even in light steel construction Where to Buy of the supplier.

You can find a detailed one here Article on current steel price developments.

Currently (08/2023) the is in Europe Steel price  on the London LME raw materials exchange at around €700 per ton (1.000 kg).

Commercially available sheets, Steel beams and profiles cost approx. €1 per ton (1.000 kg) when purchasing large quantities.. Small quantities in the steel trade and special material grades are correspondingly more expensive. There are also big regional differences.

The high volatility of steel prices is causing difficulties for many companies. You can protect yourself against market risks with price escalation clauses or derivatives.

Energy and auxiliaries

Energy prices for industry in Europe vary by up to 100%. In contrast to steel production and processing, they have Energy costs but only in the production of steel structures little influence.

Auxiliary materials such as technical gases or welding electrodes can be purchased at similar prices in all industrialized nations and have little effect on the final price of a steel structure.

Labor costs

However, the situation is completely different when it comes to wage costs. The Labor costs are in the production of steel components such as welded structures the decisive cost factor. Particularly for complex steel components with many processing steps labor costs contribute disproportionately to the final price. However, this statement only applies to components with many manual work steps. For orders with a high level of mechanical vertical integration, such as for example Series production of stamped parts, cutting or CNC bending, labor costs lose influence and other costs, especially transport costs, gain more weight.

According to Eurostat, the cost of one was Hours worked in the industry in 2019 in Germany €41,20, in Romania only €6,90. You can see the additional labor costs of some important industrial locations in the EU in the following table:

These figures are average wages in the industry. Key workers such as certified welders are in high demand internationally and are therefore significantly more expensive even in low-wage countries.

Switzerland is not included in this table. In 2012, according to the Swiss statistical lexicon, wage costs in industry were already over €50 per hour. For this reason, labor costs in Switzerland have an above-average influence on steel construction prices.

Administration costs and company profits

In addition to company profits, these costs include expenses for buildings and machines as well as personnel that cannot be directly assigned to an order.

When calculating in steel construction companies, all direct costs, primarily materials and working hours, are usually recorded and then multiplied by a factor for administration costs and company profits.

External costs

Depending on the requirements, external costs also influence the calculation. The most common here are Costs for galvanizing the steel structures to call. Painting is carried out internally by most steel construction suppliers, but some also deliberately outsource it. In contrast to galvanizing, these are Painting costs depend heavily on labor costs. While Painting is significantly cheaper in low-wage countries is, there is at Galvanizing shows no significant differences between countries.

External costs for stress-relieving annealing are very often incurred in welded constructions. In addition to the actual costs for the external service, there are also the costs for transport.

Indirect costs

Costs that are not directly visible on the project billing are very difficult to record (hidden costs). However, these are particularly important for steel components. In contrast to purchased parts, there is more need for clarification with order-related production parts. The longer a customer works with a supplier, the easier the projects become.

In addition, there are other costs to consider, especially for steel construction:

• Transport costs
• When importing from non-EU countries, there are fees for customs clearance of the goods. There are no customs duties when importing steel construction from EUR1 countries, but the import must be reported to customs. Details about Import of steel construction from EUR1 countries can be found in this article.
• Internal costs for supplier support
  • Quality Control
  • If necessary, costs for the translation of the construction documents, contracts and acceptance protocols
  • Travel expenses and telecommunications costs
• Rework costs
• Costs for parts required at short notice
• Costs due to delay (penalties, subsequent deliveries, etc.)

How is the cost distribution in steel construction?

The distribution of these costs depends largely on the complexity and type of steel components as well as the manufacturing location.

In the EU average, depending on the type of steel components, you can assume a breakdown of around 30% labor costs, 50% material costs and 20% administration and other costs.

Attention: This cost breakdown depends very much on the respective products or the type of steel structures. For simple, coarse structures, the proportion of material costs is higher and the proportion of personnel costs is lower. For complex components made individually, the labor cost share is higher. In companies with a high degree of automation, wage costs are also reduced in favor of other costs in the form of depreciation for the machinery.

The cost breakdown also depends on the manufacturing location. In high-wage countries, the proportion of material costs is lower and the proportion of labor costs is higher.

Example: Cost of an unpainted welded steel structure

For a medium one Structural steel structure made from commercially available steel plates and steel beams (Sheet thickness 5-10mm, cutting, folding, welding) are the EU average following costs per kg:

• Material costs including waste and delivery costs: € 1,50/kg
• Labor costs: €0,90/kg
• Administration and profit: €0,60/kg

This results in a total price of approximately €3,00 per kg of welded structural steel construction on average in the EU.

Cost comparison by producer country

If you take the wage costs for other manufacturing locations as a benchmark instead of the EU average, the following results Cost comparison for welded steel structures:

If you choose Poland instead of Germany as your production location, you can save €1,44 per kg of steel structure. The manufacturing costs for Steel construction from Poland are therefore approx. 40% cheaper than in Germany. In Romania even higher savings would be possible.

They are also very cheap manufacturing locations Western Balkan countries and the Turkey. Very attractive conditions are possible here thanks to the combination of low material costs and low labor costs. These countries are closely linked to the European economy and are geographically close. The Import of steel construction from the Western Balkans and Turkey is duty free, but the import of the goods must be declared. The effort and costs for this are very low and are described in the article linked above.

Cost per kilogram for steel construction in 2023

The cost of steel construction is often based on weight. Especially at Steel construction for Halls and buildings or at Steel construction for the System Engineering become mostly Prices per kilo specified. For larger projects, the buyer has calculated a theoretical weight for the respective component at the time of ordering. Based on this, the steel construction supplier then creates an offer. After production, the construction is weighed and billed based on the actual weight.

The costs per kg of steel structure are also often used for cost comparisons and framework agreements. In order for these to be comparable, the complexity of the steel construction, the surface coating and the purchase quantity must be very similar.

Price examples for steel construction per kilogram 2022

The following prices are empirical values ​​from the B2B environment and serve as guidelines only. The prices for project-related steel components must always be determined individually. We would be happy to provide you with a free, non-binding offer for your steel construction.

When is low-cost country sourcing for steel components worthwhile?

Whether low-cost country sourcing of steel components is worthwhile for purchasing in individual cases or not can be determined Don't judge across the board, but depends, among other things, on the following factors:

Condition of the steel components

The more complex a component is, the more difficult it is for the supplier to develop over a long distance. Since labor costs are the deciding factor, the ideal component requires a lot of manual work. If the proportion of machines is very large, fewer price advantages can be expected. In this case, there are more likely to be price differences due to subsidies or different financing of the production facilities.

Subscription period and order volume

For one-off requirements, it is comparatively difficult to develop a new supplier. Unless it involves very simple components or large individual projects, low-cost country sourcing is often too complicated in this case. For recurring orders and a corresponding purchasing volume, going abroad is worthwhile, even for more complex orders.

Requirements for successful low cost country sourcing

In order for low-cost country sourcing to be successful, we also need to do it internally the course in the company be provided for this and it must be clarified whether the company meets the necessary requirements.

Does the company have the necessary ones? Resources and necessary competence, the right one Find and develop suppliers? There are countless steel construction companies, but which one can really meet the requirements? Finding the right steel construction supplier is often like looking for a needle in a haystack and often takes up more time than expected.

Many times you wait in vain for offers. If you get them, the price, delivery time or availability often do not correspond to your original expectations. Many projects are unique and the many steel construction suppliers also have individual strengths and weaknesses. Finding these out and Jactio.com has set itself the goal of finding the right partner for the right request.