Steel makers quantify effects of price increases
4th July 2005
Following last week’s announcements from Corus and rival Arcelor of the end of multiple-year steel supply contracts with vehicle manufacturers, Automotive News Europe has noted that world steel prices rose last year from around €290 per tonne to almost double that amount.
The typical family car, says ANE’s report, uses about 1 tonne of steel, though some 40% is lost as scrap (but re-used) during the production process. The doubling of steel prices has increased the total materials cost per car by 1-2%, according to Corus.
A countervailing effect of rising steel prices has been to improve the economics of end-of-life recycling of cars, now the financial responsibility of their manufacturers in Europe.
It shows how small the cost of steel is in reality, when a “doubling” in price only adds 1 to 2% to the overall cost of a car
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1 comment:
You might want to read the Morici paper about manufacturing and steel prices - which has similar conclusions. See steelonthenet blog for further comment.
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