Steel prices: how much higher can they go?
Steel prices could rise even higher after soaring almost 50 percent this year, as raw material costs continue to climb and global demand shows little sign of abating.
Steelmakers have steadily been raising prices, partly to benefit from a strong market after years of decline in the industry, and also to pass on spiraling costs of iron ore and scrap metal, two major raw materials for steel.
Others have regularly added a surcharge to shipments to cover the extra costs of making steel, which is in huge demand in China, India and other nations building up their economies.
“We have not peaked,” Michelle Applebaum, an independent steel industry analyst in Chicago, said on Friday. “Raw material prices will continue to rise and so will steel prices.”
Michael Locker, who runs steel industry consulting firm Locker Associates in New York, said rising steel prices are unlikely to ease off much in the near term.
“Prices will peak soon, and then drop some faxless payday advance. Currently we are seeing $1,100 to $1,150 (per ton) for hot-rolled steel and it may drop to $800 or $900. But I don’t see prices going back to the $400 we had last year,” he said.
Manufacturers who buy steel are feeling the pinch, but often have no choice. Toyota Motor Corp (7203.T: Quote, Profile, Research) just agreed to pay Nippon Steel Corp (5401.T: Quote, Profile, Research) and other Japanese steelmakers 30 percent more for sheet steel.
With iron ore price rises of 65 percent agreed upon with Brazilian ore producers and a possible 85 percent rise this year for Australian iron ore, steelmakers are over a barrel.
Filed under: online by Wolf