Your Next Hiring Problem Might Have Started in a Steel Mill

Over the last few months, we've spent an unexpected amount of time talking about steel.

Usually, our conversations are centred around recruitment. We're speaking with shipyards planning vessel refits, offshore contractors preparing mobilisation programmes, fabrication companies searching for coded welders, or engineering firms gearing up for shutdowns and maintenance projects.

Recently, though, one topic keeps finding its way into almost every discussion.

Steel.

Not because businesses have suddenly become interested in commodity markets, but because steel prices are starting to influence decisions well beyond procurement. They're affecting project budgets, build schedules, repair programmes, fabrication timelines and, increasingly, workforce planning.

Most coverage around steel focuses on manufacturing, construction or international trade. Yet many of the same pressures are being felt throughout the commercial marine, offshore and mechanical engineering sectors. In some cases, the effects are being felt even sooner.

For businesses operating in these industries, steel is no longer simply a material cost. It's becoming a major factor in project delivery, commercial planning and hiring decisions.

Steel Has Become More Than a Procurement Issue

Steel has always sat at the heart of marine and engineering projects. From vessel hulls and offshore structures to pipework systems, fabricated components and maintenance works, it plays a role in almost every stage of delivery.

What has changed is the level of uncertainty surrounding it.

According to the OECD, a 1% increase in steel prices can increase ship production costs by around 0.5%. While that may seem relatively small on paper, it can create significant pressure for businesses operating on fixed-price contracts, lengthy project schedules and already tight margins.

The challenge becomes even more apparent when considering how much steel is used across commercial marine projects. Industry estimates suggest steel accounts for between 75% and 85% of a vessel's total weight. When a material that fundamental becomes more expensive, the impact naturally spreads across the entire project.

Projects don't usually stop because steel prices increase. What often changes is confidence.

Many of the employers we speak to aren't necessarily concerned about today's price. They're concerned about where prices, lead times and availability may sit six months or even a year from now.

That uncertainty makes forecasting more difficult. Budgets become harder to manage, procurement decisions carry greater risk and long-term planning becomes less predictable.

In many cases, it's the lack of visibility rather than the cost increase itself that's creating the biggest challenge.

Why Shipyards Are Keeping a Close Eye on Steel Prices

Shipbuilding has always relied on long-term planning.

Contracts are often agreed years before a vessel reaches delivery. Materials are purchased in phases, labour requirements change throughout the build cycle and projects depend on a reasonable degree of cost certainty to remain commercially viable.

That's why fluctuations in steel prices can create such significant challenges.

The wider market remains active. According to Clarksons, global ship deliveries increased by 6% to 43.8 million CGT during 2025. BIMCO also reported that the global orderbook reached a 17-year high of 191 million CGT during the first quarter of 2026. Demand remains strong across commercial shipping, offshore support vessels and specialist marine projects.

The work is there. The difficulty is that many of the contracts currently being delivered were agreed under very different market conditions.

A shipyard that priced a project eighteen months ago may now be purchasing steel at significantly higher rates than originally anticipated. European hot-rolled coil prices rose by around 20% in the six months leading up to late April 2026. In many situations, those additional costs can't simply be passed directly to the customer.

Instead, businesses are left absorbing part of the increase themselves. As margins tighten, caution naturally follows.

Expansion plans face greater scrutiny. Investment decisions take longer to approve. Hiring timelines become less certain.

This doesn't necessarily mean fewer opportunities across the sector. More often, it means employers want a clearer picture before committing additional resources.

We're hearing this regularly from organisations involved in shipbuilding and marine engineering recruitment. Demand for skilled professionals hasn't disappeared. What has changed is the certainty around exactly when those skills will be needed.

Projects are still moving forward. The challenge is that planning around them has become more complicated than it was a few years ago.

Repair Yards Are Seeing the Effects Much Faster

While shipbuilders can sometimes spread rising material costs across longer delivery programmes, repair yards and dry docks often feel the impact far more quickly.

Repair projects are typically priced much closer to the work taking place. Whether it's hull renewals, ballast tank repairs, deck steel replacement, pipework upgrades or structural modifications, steel forms a major part of the cost.

When steel prices rise, those increases find their way into quotations almost immediately.

According to Allianz Commercial's Safety and Shipping Review, steel prices are, in some cases, more than 60% higher than they were four years ago. The report highlights how rising material costs have significantly increased the expense of vessel repairs and conversions, contributing directly to higher marine claim values.

At the same time, many repair facilities remain heavily booked. For vessel owners, that creates a difficult position.

Essential repairs still need to be completed. Classification requirements don't disappear. Regulatory compliance remains mandatory.

What often changes is everything surrounding those critical works.

Upgrade programmes are postponed. Conversion projects are reviewed more carefully. Planned maintenance packages are scaled back or moved into future docking periods.

As a result, the shape of the work entering repair yards is beginning to change.

Research from Drewry found that propulsion upgrades and energy-efficiency retrofit activity grew by around 24% annually between 2021 and 2025. Environmental regulations such as FuelEU Maritime and the EU Emissions Trading System continue driving demand for mandatory retrofit projects, meaning these works often take priority when dock space becomes available.

The consequence is that planned maintenance can find itself pushed further down the queue.From a workforce planning perspective, that creates a challenge.

A project expected to begin in June may suddenly move to September. Inspection findings can expand the scope of work overnight. Vessel owners may approve repair packages with little notice after receiving survey results.

The work itself rarely disappears. The difficulty lies in predicting when it will happen.

For employers, that uncertainty can make resource planning far more difficult than it appears from the outside. Labour requirements can shift rapidly, leaving businesses either short of skilled workers or carrying additional costs while waiting for projects to commence.

Offshore Engineering Faces a Different Challenge

The relationship between steel and offshore engineering looks slightly different. Price remains important, but availability can be just as critical.

Many offshore projects require specialist steel grades with strict certification requirements. Materials used in jackets, monopiles, transition pieces, substations and other offshore infrastructure can't always be sourced quickly, nor can they be easily substituted.

When supply becomes restricted, project schedules can quickly come under pressure.

The scale of future demand highlights why this matters. According to UK Steel and the Government's Steel Strategy, offshore wind developments alone are expected to require between 20 and 25 million tonnes of steel between now and 2050. Government estimates place the value of that demand at approximately £21 billion.

For fabricators, engineering contractors and the wider supply chain, that represents a major opportunity. It also creates a significant capacity challenge.

When steel deliveries arrive later than expected, fabrication programmes move. When fabrication programmes move, installation schedules move. When installation schedules move, workforce plans often need to move as well.

What begins as a procurement issue can quickly affect an entire project.

This is one of the reasons we're seeing more employers placing greater emphasis on forward planning. Businesses that may once have focused on recruitment closer to mobilisation are increasingly looking to secure talent earlier in the process. Many recognise that procurement planning and workforce planning are becoming increasingly connected.

The days of treating recruitment as a final-stage activity are becoming harder to sustain.

A delayed material delivery doesn't remove the need for skilled welders, fabricators, pipefitters or mechanical engineers. It simply changes when those skills are required.

The employers navigating these challenges most effectively tend to be those planning further ahead. They're building relationships with specialist mechanical engineering recruitment partners earlier, maintaining talent pipelines and identifying future workforce requirements before projects reach critical stages.

As offshore investment continues and major infrastructure programmes progress, that approach is becoming increasingly important.

The Impact of Tariffs and Global Supply Chains

Steel prices aren't being influenced by a single factor.

The UK's new steel tariff regime is one of several developments creating uncertainty across the market. From July 2026, tariff-free import quotas will be reduced by 60%, with imports above quota thresholds facing tariffs of 50%, up from the previous 25%. A transitional exemption covers goods under contract before 14 March 2026, running to the end of September, but for anything beyond that window, the cost exposure is live.

The British Chambers of Commerce and the British Constructional Steelwork Association have both raised concerns about how these changes could affect manufacturers and fabricators that rely on imported steel grades. The BCSA has also highlighted that imported fabricated steel currently sits outside the quota system, creating a risk that more fabrication work could move overseas while domestic businesses face rising material costs.

For marine engineering and mechanical engineering companies, access to materials can be just as important as price. Certain grades, specifications and products simply aren't available in sufficient quantities within the domestic market. Where projects rely on international supply chains, any disruption or additional complexity can quickly affect planning, scheduling and delivery.

Energy markets continue to add another layer of uncertainty. The Iran conflict pushed Brent crude prices to around £84 per barrel in late March 2026 and sent LNG freight rates sharply higher across both Atlantic and Pacific markets, with war-risk insurance premiums surging by more than 1,000% in some cases and major insurers pulling cover from parts of the Gulf entirely. Prices have since eased following the June ceasefire, with Brent back to around £62 per barrel, but Maersk had not resumed normal Middle East operations as of mid-June and experts say clearing mines and restoring insurer confidence could take a further 40 to 50 days.

Steel production remains heavily dependent on energy, meaning rising fuel and energy costs often feed directly into steel pricing. Even when freight markets begin to stabilise, the effects can continue to be felt throughout the supply chain for some time afterwards.

This is one of the reasons why many employers no longer see steel as purely a procurement issue. Increasingly, it forms part of a much wider conversation around risk management, project delivery and business planning.

The Workforce Planning Challenge That Often Gets Overlooked

When steel prices are discussed, the focus almost always comes back to cost. In our experience, that's only part of the story.

The conversations we have with employers often end up focusing on something entirely different: people.

When projects become harder to predict, workforce planning becomes harder to predict too.

A fabrication package might be delayed because materials haven't arrived on schedule. Recruitment plans are pushed back accordingly. Then the materials arrive, the programme accelerates and suddenly there's an urgent requirement for welders, fabricators, pipefitters or mechanical fitters with very little notice.

We've seen versions of that scenario play out repeatedly over the past year.

The businesses that tend to manage these situations most effectively aren't always the ones that react the fastest. More often, they're the ones that start planning earlier.

They maintain relationships with trusted recruitment partners. They build talent pipelines before vacancies become urgent. They keep conversations active with skilled professionals even when immediate requirements don't exist. Most importantly, they understand that skills shortages don't disappear simply because project schedules change.

That's particularly relevant across marine and mechanical engineering recruitment, where experienced tradespeople continue to be in strong demand.

We've discussed similar challenges before in our article on hidden staffing risks in marine refit and shipyard projects, where changing schedules often create workforce pressures long before work actually reaches site. The same principle applies across fabrication, offshore engineering and maintenance projects, where resource requirements can shift quickly as programmes evolve.

Businesses that plan further ahead are generally better positioned when demand increases unexpectedly. It's one of the reasons we've previously explored why engineering companies that plan hiring early often deliver projects more efficiently. Forward planning doesn't remove uncertainty, but it does make it easier to respond when circumstances change.

In today's market, that flexibility is becoming increasingly valuable.

Looking Ahead

Despite the challenges surrounding steel prices, there are few signs that activity across the marine and engineering sectors is slowing down.

The World Steel Association forecasts global steel demand growth of 0.3% during 2026, increasing to 2.2% in 2027. The OECD expects demand across the UK and EU to grow by 1.4% during 2026 following a contraction in 2025. While that points towards stabilisation rather than rapid growth, the overall direction remains positive.

Demand within shipbuilding continues to hold up well. Drewry expects repair and retrofit activity to remain busy as environmental regulations become increasingly stringent. Clarksons expects offshore vessel demand to remain steady through 2026. Major infrastructure projects continue to progress.

The issue isn't a shortage of work. The challenge is the growing number of variables businesses need to manage while delivering that work.

Steel prices, energy costs, freight markets, tariffs and supply chain pressures all add complexity to project delivery. Some of these factors may ease over time, while others are likely to remain part of the operating environment for years to come.

The businesses that navigate this period most successfully are unlikely to be those waiting for market conditions to become easier. More often, they'll be the organisations improving visibility across their supply chains, strengthening workforce pipelines and planning further ahead than their competitors.

Because when steel prices rise, the impact rarely stops with procurement. Eventually it reaches project schedules, commercial decisions, hiring plans and operational delivery and that's when it becomes relevant to every shipyard, repair facility, fabrication company and engineering contractor operating in the market today.

For businesses looking to strengthen their talent pipeline and create greater certainty around future projects, specialist support in marine engineering recruitment and mechanical engineering recruitment can provide valuable stability, even when wider market conditions remain difficult to predict.