Steel Prices Where Next, and at What Cost?

Steel Prices, where will they go?

Today's state of trade is interesting to say the least, unfortunately in a particularly uncomfortable way.  So what does the future of steel prices hold?

Are we setting ourselves up for a fall by relying and basing pricing policies on rates that are currently known to be artificially low?

Will you lose orders if you don't!!! We must all remember how rapidly prices were increased in 2004 and 2008 without care or concern for supply chain commitment on contracted prices.  We must be careful that the rates we quote can be supported for the potential period of contract, it is safe to say in these testing times there will not be enough margin on any contracts in the short term to withstand increases of £20- £30 per ton let alone the £100 per ton, which I believe is currently the difference between current market inventory prices and replacement price.

Will steel mills / raw material producers increase order book volumes if they drop prices?

The answer would probably have to be NO, in the short term there is simply too much inventory within the system and even if the steel mills dropped rates 50% below the current market price, I do not believe stockiest would buy.  Not because they believe it will drop further, but they can't sell what they have and in some cases now can't pay for what they have.

What could steel mills / raw material producers do to protect and grow the market share of the steel construction industry?

The Steel Construction Industry is currently a wounded animal, we need stability not crippling increases and then dramatically reducing prices.  As an industry we must recognise where our target market is positioned and how to best to service that market to increase our share, steel procurement rates must reflect the needs of the supply chain to provide competitive solutions to the end users. Some elements of the steel construction supply chain have serviced their own agendas rather than considering stability and needs of the customer, those elements have gone from making huge profits to huge loses.  I wonder knowing what they know now would they do it again? As an industry we have many casualties resulting from market conditions who are suffering and may not survive, lets hope we all learn a lesson from recent experiences and look after the supply chain to better equip the industry to cope with short, mid and long term challenges

Comments

At 16:37:07 on 19/02/2009 Nick Stringer wrote:

Whilst it is true, the steel market has gone through one hell of a curve and got back to the begining again in 12 months. The fact does however remain, that we are in very difficult trading terms and the only thing that matters with our customers (we also sell a comodity product)is the best price possible, in fact, its the prices they had in 2006 which we are now been given to beat. Price is king and we need to support business by serving our customers with the best prices possible.

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