01.09.2004

First steel price correction?

Tata Steel of India has, according to an auto industry report, cut its price for automotive grade steel products by 2,000 rupees ($43/£24) a tonne. Could this be an end to the Steel price rises seen over the past year? Analysts say steel prices are still way higher than last year with scope for more price cuts coming through.

Steep steel price rises caused equipment users to implement price increases of between two and seven percent earlier this year with further increases forecast if the price of Steel continued to climb. Steel industry experts predicted that prices would fall back in 2005, could this be an early indicator? Will manufacturers allow prices to fall back next year?

The main cause of the steel price increases and shortages has been the rapidly expanding demand form China and India. China has recently taken some drastic steps to slow down its economy, including the holding up of imported equipment at the docks etc.. Many manufacturers will be looking forward to seeing the “boot on the other foot” when dealing with those steel makers who abused their position during the current shortages.