Rising prices in international steel transactions are a hot topic these days in steel analysis and news outlets around the world. The issue that has fueled this unexpected rise in prices is the sharp rise in prices for downstream steel resources such as iron ore and coal, which has left the steel market worldwide with an indescribable inflammation. Join Artan Press in this report to examine the most important factors and factors in increasing the world price of steel.
*** The main reason for the increase in world steel prices
The main factor in the growth of prices in the international steel chain is the price movements in the iron ore sector. According to the latest Metal Bulletin and Platts reports, iron ore prices have returned to price growth 9 to 11 years ago, and because this has happened in the iron ore trading history, not only has it not stagnated the markets, but also consumers are afraid of declining demand and iron ore shortages. And we are witnessing heavy transactions in this sector, so if there is interest in starting activities despite the inflammatory prices, it will return to the issue of increasing global prices.
Since the increase in prices in the basic group of steel production and downstream industry strongly affects the prices of upstream industries, naturally this issue will increase the global price of steel, increase the price of Iranian export steel and increase the price of cedar.
But the point to be noted is how far this domino of rising prices will penetrate the Iranian steel chain. The Iranian steel market is going through hectic days due to the new guidelines in the steel pricing method, and now the question arises whether the market has the ability to pull up prices. Certainly, the developments that have taken place will increase the domestic selling prices of iron ore, concentrates and pellets, although these prices are still far from world prices.
*** The main factors in the excitement of world steel prices
On the other hand, developments in Europe at the end of the year is one of the main factors in the excitement of steel prices in the international market. With the arrival of Christmas, we will see the expiration of the trade agreement between the EU and Britain, which has caused steel buyers to worry about the effects On steel prices in the UK.
The issue of Britain leaving the election is not a small issue and could put European steel markets on the rise by mid-next year. At the moment, there is no concern in European trade, but the direction of British foreign policy has not yet been determined, and this uncertainty could lead to tense paths.
Another influential factor in increasing steel prices worldwide can be assessed as systematic changes in supply and demand in general. Some special steel products have had price growth due to irregular supply, but due to anti-dumping policies. It is the European Union and has no direct connection with the British market. Usually the British market was priced a little more balanced than the world markets. But now Britain has aligned its steel market with the world market. In fact, steel prices in the UK have followed global market trends in recent months.
*** China’s greyhound in steel production
Another factor in the growth of world steel prices can be seen in China’s monopoly on steel production and raw materials in the corona. China is the only country that has experienced positive economic returns this year, and its economic growth has gone up, unlike the rest of the world.
During the quarantine, China filled its warehouses with raw materials and finished steel and metal products. Because it was expected that with the formation of favorable conditions for the markets, supply is likely to increase. China has gone a few steps further than other countries in this situation.
By controlling the corona pandemic, China reactivated its industrial and manufacturing markets six months ago and was able to return to some of the required production. China is expected to see an increase in domestic steel prices in 2021 due to supply constraints, improved global economic activity after the pandemic and high demand for steel.
*** Increase in the cost of housing construction
In the world, the construction path has been accompanied by challenges, and the cost of housing construction is expected to be very staggering, despite the new prices. Recently, the price of construction steel has reached a record high as the rebar has reached its 19-month high of 4,231 yuan ($ 646) since December 18, while the price of the Tangshan billet reached a record 4,000 yuan ($ 611) per tonne. The level has been reached.
Changes in the price of steel in China’s bases bring a lot of benefits to this country. At present, China is the only country that has the ability to buy heavy raw materials and send high orders, and in a way, the entire world steel market is lined up from this country. According to the China Iron and Steel Association, due to high steel prices, the profits of Chinese steelmakers during the months from January to November 2020 increased by about 2.1 percent per year.
But China has not thought about one thing, and that is the rise in raw materials following the global rise in the price of steel and other products. Countries such as Iran and Turkey, which have extensive crude sales in mind, will no longer market steel chain raw materials at previous prices, and this could be a risk for the Chinese market in the long run. High material costs Primary, especially iron ore, may further affect and reduce the profitability of factories.
*** Rising iron scrap prices following the rise in iron ore prices
When talking about high prices In raw materials, another area will see price growth. Immediately with the increase in the price of iron ore, the price of scrap iron is also on the rise. In recent days, the price of a ton of scrap in recent weeks has witnessed a rapid growth in the price of scrap iron, so that in recent days the price of a ton of steel scrap has reached more than $ 440.
The $ 440 scrap is very close to the figures that Iran has set for the export of steel ingots. This has made the price of scrap iron attractive for export purposes. Of course, the interior is also well covered with this volume and price. Because producing scrap steel is more economical than iron ore. Because production and energy costs are reduced by about 30 percent, this causes the domestic producer to move to scrap metal.
The question may now be whether the 30 percent reduction in energy costs for a steelmaker is attractive enough to migrate to the scrap metal production route. The answer is yes. This is because in previous years, China had imposed restrictions on the import of scrap iron, citing environmental reasons.
*** Increased demand for scrap in China
In 2021, China lifted the ban on scrap imports in order to offset some of the corona-era losses for the producer by reducing the cost to steelmakers. Double the scope for the entry of other actors. China is projected to meet 10 percent of its steelmaking raw material needs by 2021 through imports of scrap iron, which means more than 100 million tonnes of scrap demand could push up global commodity prices.
An increase in the price of scrap metal will have a significant effect on the growth of steel prices and, consequently, will allow the price of iron ore to continue to rise.
Some environmental and geographical threats and unexpected events also affect the steel markets. The recent landslide at a Brazilian mine on December 18, for example, could push up iron ore prices further. On the other hand, the policies adopted by Britain towards the European Union, as well as the seriousness of the British coronavirus effect on the steel markets, can lead to an upward channel in all world markets in the medium term.
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