Steel Coil Price Increases Announced

With depressed demand and falling prices, the last thing anybody would expect is talk of substancial increases to steel coils. It is however a potential reality. I mentioned in my last blog that increases of 20 - 30 Euros were expected, as a spike in demand to restore inventories created a supply and demand shift as demand outweighed supply. This movement would require a 4% increase to rates for full recovery. With confidence being so low and the expectation of the price increase being temporary; we haven't seen the general announcements confirming increases. The supply chain probably thought it would be absorbed in the short term.

The news I heard yesterday now suggests the increases for quarter 4 will be more like 7%, this increase may be a step too far and the supply chain will not be able to absorb the price movement, hence will be passed up the supply chain.

Although I'm not suggesting you revise your pricing strategy straight away, I do strongly recommend that your terms are clearly stated. You will then be in a position to recover if increases arise, as no doubt like Albion, you've had to delve into your margins to compete for what work is available.

After I'd sat wondering how this would affect Albion Sections and our valued customers businesses, a positive notion occurred to me. If worldwide demand is slowly increasing and steel mills have an under capacity to accommodate the order books due to huge capacity cuts, the increases may be sustainable. This would, I believe increase demand as those projects that are currently in the shadows would have an urgency to complete avoiding price hikes and may get the ball moving again, pumping much needed cash into the steel construction system.

If the increases are sustainable and applied, well done to those 10% of people that predicted increases in the on line poll we conducted earlier this year.

I will keep you informed of any changes via my blog and e mail, please feel free to add your comments.

Comments

At 14:54:45 on 28/08/2009 Ger Walsh wrote:

I agree, this might be the push to get developers to start going again. Steel prices are now at an all time low, exceptional value @ this moment, this may be the kick start needed to get some development required.

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