Monday, November 01, 2004
Raw Material Pricing
We keep hearing predictions that steel prices have reached their plateau and will shortly start to drop. We certainly hope so. Steel prices have risen as much as 60% in the last 6 months, depending on steel type and grade.
November is the first month where we've actually seen some small evidence of prices stabilizing. On recent stainless steel wire quotes, the surcharges for November were actually lower than for October. Not much lower, but at least we reversed the trend of the last 6 months, which had been steadily rising every month.
Behind the scenes, the rapid rise of steel consumption in China and the consequent inability of the marketplace to keep up with demand both seem to be abating.
On the demand side, consumption in China seems to have abated. And the Chinese government seems to have started to make real efforts to bring the overheated economy under control. They recently raised interest rates, for the first time in nine years. Economists are saying it wasn't enough, and they'll have to be rasied more, but it's something. Governments there are also cracking down on too-rapid industrialization in certain areas where the infrastructure isn't capable of supporting such growth.
On the production side, more steel producing capacity has been brought online all over the world. In most cases, the first and quickest moves have been to re-open blast furnaces that were mothballed over the last few years. This is always the fastest way to get more steel capacity. In addition, a number of new furnaces have been commissioned, in North America, in Europe and in Asia.
If you buy parts made from other metals, like coppers and brasses, you should know that copper prices are only slightly below a 16 year high at the moment. And copper and brass lead times are all over the map. We have to enquire individually for each case.
As always, if you have any questions, your salesman John will be happy to answer them.
November is the first month where we've actually seen some small evidence of prices stabilizing. On recent stainless steel wire quotes, the surcharges for November were actually lower than for October. Not much lower, but at least we reversed the trend of the last 6 months, which had been steadily rising every month.
Behind the scenes, the rapid rise of steel consumption in China and the consequent inability of the marketplace to keep up with demand both seem to be abating.
On the demand side, consumption in China seems to have abated. And the Chinese government seems to have started to make real efforts to bring the overheated economy under control. They recently raised interest rates, for the first time in nine years. Economists are saying it wasn't enough, and they'll have to be rasied more, but it's something. Governments there are also cracking down on too-rapid industrialization in certain areas where the infrastructure isn't capable of supporting such growth.
On the production side, more steel producing capacity has been brought online all over the world. In most cases, the first and quickest moves have been to re-open blast furnaces that were mothballed over the last few years. This is always the fastest way to get more steel capacity. In addition, a number of new furnaces have been commissioned, in North America, in Europe and in Asia.
If you buy parts made from other metals, like coppers and brasses, you should know that copper prices are only slightly below a 16 year high at the moment. And copper and brass lead times are all over the map. We have to enquire individually for each case.
As always, if you have any questions, your salesman John will be happy to answer them.
This BLOG brought to you by
Hamond Industries Ltd - the Slide Forming Specialists
