Steel prices continue to rise

The high demand for steel has skyrocketed its price, only from mid-December 2007 to February 2008, the increase in the United States was 28%. Forecasts published by the International Iron and Steel Institute (IISI) point to an apparent growth in global steel demand of 6.8% in 2008 compared to 2007.

The global price performance of the product is largely due to the high costs of iron, the basic raw material in the manufacture of steel; in the same way, we must add factors such as the high cost of freight and energy, added to the increase in the consumption of this material by Asian countries, mainly China.

According to IISI forecasts, demand for steel products remains high, largely thanks to the persistently favourable macroeconomic situation in the group of countries known as BRIC, in the emerging nations of Asia and in the Middle East and CIS regions. This conjuncture, combined with moderate but positive demand growth in Europe and the apparent recovery of NAFTA, suggests a global increase of approximately 6% in 2008 compared to 2007.

For the U.S. market, an average price increase of $20 per tonne was successfully applied for flat product sales in the fourth quarter of 2007, followed by ArcelorMittal making an increase of $40 per tonne for deliveries made on or after 1 January 2008. In any case, according to the same company, despite the upward trends experienced by the costs of raw materials, current prices in the United States are below the levels currently registered in world markets.

However, the dizzying pace at which the price of steel rises in the United States is also related to the new determination of the Japanese, South Korean plants and the Brazilian mining giant Vale, which agreed to apply a 65% increase to the price of iron ore. Therefore, most major steel mills in the United States announced further price increases.
The most tangible problem with this news is that the high costs of the material will inevitably be transferred to the market, to the end user, if the Iron, freight, energy in such high percentages rises, the manufacturers of machinery and inputs will have no choice but to pass the price to the contractor and these in turn will pass it on to the end user.

Currently, some steel suppliers are limiting quotes to three-month periods, as they are not sure how prices will be after that time, according to companies that buy large quantities of steel, it is not known where the price will end up this year.