How do steel prices fluctuate?

1. How do steel prices fluctuate? A number of factors contributing to the production of steel makes the cost quite volatile and the changes that take place within the industry influence adjacent industries as well. With the economy currently crumbling due to the effects of covid-19, the price of metals have fallen sharply since mid-January. The cost of raw materials required to produce steel contributes to 60% of its price. When there was an inflation in the cost of raw materials in 2016 major steel companies like TATA steel, JSW steel and SAIL were immensely affected. The availability of raw materials (iron ore, coking coal and scrap metals) depend on mining and refining operations which are not necessarily carried out all year round, making time an essential factor in determining the price of steel. Also the leases imposed on mines contributes to the price of steel. If they expire, you can expect an increase in the price. Now that the supply from China, which is the largest producer of iron ore (44% of the world’s output) is diminishing, steel companies have hiked the prices. Shipping cost is another major factor in regulating the price of steel. Shipping cost covers labour input, fuel cost and the length of the transit.

2. Since fuel is needed for transportation, high price of oil means high shipping cost and higher price of steel. Observations have been made in the statistics over the past few years that whenever the price of oil bellied, so did the price of steel. And when the price in oil plummeted, so did the price of steel. They go hand in hand. Supply and demand, like in any business organization, determines the price of metal. Higher demand with low supply begets high price and vice versa. India is 2nd largest producer of steel, producing 82.68 million tons (as of 2019). The demand for steel is dependent on the application of its property like strength, density and thermal conductivity. Those countries that are in need of infrastructure have higher demand for steel as they consume about 80% of steel production. Time of the year is important in the production of steel. Obviously it would be low in the monsoon season and in regions of extreme temperature as labour work would be difficult. Unforeseen weather conditions can put steel production companies at risk affecting other industries like the auto sector. The aftermath of covid-19 has made the demand for steel weak and due to the onset of monsoon season and a deceleration in infrastructure projects has forced steel companies to hike steel prices in hopes that it will bring profit. TATA steel has observed a drop in production by 34% to 2.99 million tonne in June. JSW steel’s production of crude steel downed by 2.96 mt(4.24 mt). The pandemic has adversely affected the production of steel among many companies and it would be difficult to predict how steel prices shift. Kaushalesh steels and cements is one of the leading suppliers of TMT, all kinds of MS (mild steel), structures steel and cements at very reasonable and competitive prices.

3. Visit our website to know more about the Steel rate in Bangalore. Kaushalesh Steels Contact Us Website: http://www.ksteel.in/ Email: tmt@ksteel.in Phone no.: 9341233005