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Engineering Industry Reports and Surveys
News Release from: MEPS (International)
Edited by the Engineeringtalk Editorial
Team on 25 December 2003
Steel review reveals record prices
Who would have guessed two years ago, when steel prices were at rock bottom, that by December 2003 many prices would have climbed to near-record levels?
Who would have guessed two years ago, when steel prices were at rock bottom, that by December 2003 many prices would have climbed to near-record levels Of course, steel markets have always been cyclical, but the extent of the leap in prices since the last downturn has been quite remarkable
This article was originally published on Engineeringtalk on 4 Nov 2005 at 8.00am (UK)
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The low point of the last cycle was reached during the period January-February 2002.
The initial spur for the surge in steel prices during the first half of 2002 was the USA's imposition of import tariffs, followed by similar action by other importing countries who feared their markets would be swamped by steel diverted from the USA.
The MEPS world average price for hot rolled coil advanced by 40% during this period - from US $241 per tonne in January 2002 to US $336 per tonne in August.
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Since then growth has been more erratic but slower.
From the start of this year up until September, many steel prices stagnated (albeit at a fairly high level) or in some cases trended slightly downwards.
Renewed expansion in the last few months of 2003 has seen the average world price for hot rolled coil end the year at US $362 per tonne - this is up by 10% over the last 12 months and by 50% since the start of 2002.
Plates and cold rolled coils have shown a similar development, having risen by 35 and 45%, respectively, in the last 24 months.
Long products have experienced an analogous trend, though in most cases price fluctuations have been less dramatic.
It is somewhat surprising that the world average price for mesh quality rod should have risen by as much as 16% in the last year.
Construction in most major markets - North America, Western Europe and Japan - has not been particularly healthy, although there has been strong demand for light long products in China and the Middle East.
What has been driving the price of bar and rod for much of the year has been rising costs.
The price of scrap has risen by well over 50% since the start of 2003.
Higher expenditure on iron ore, coal/coke, ocean freight and other inputs have been one of the chief contributors to recent steel price rises.
The mills are trying to recover their outlay rather than raise profit margins.
Furthermore, because our world price average is expressed in dollars, that currency's weakness has played a part in the price escalation especially in the last few months.
Going into the New Year, the tone in world markets is of continuing firm prices for many products.
While Chinese demand continues to grow, an impulse for strong steel prices will remain.
However, the peak of the current cycle cannot be too far away.
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