Tuesday, February 19, 2008

Steel strip "thin on the ground" in the UK

Hot rolled steel strip seems to be in short supply here in the UK at the moment. It's hard to put this down to an excess of demand as manufacturing activity levels are somewhat muted.

At the same time as the steel manufacturers are announcing price increases, they are imposing allocations upon service centres and big users. Now the more cynical amongst us might be inclined to be suspicious of shortages at a time of rising prices, as restricted supply is likely to help prices increase. Whilst there is no doubt that the rising price of iron ore and fuel are driving up steelmaking costs, it's still hard not to sense a little manipulation of the marketplace on the supply side.

There is no arguing against the natural economic impact of supply and demand on market prices, but with the financial pundits all predicting a slow down in the economies of the Western world it's difficult to see where any increasing demand is originating from. I am not against steelmakers earning a profit, but putting the squeeze too hard on Western manufacturing will only increase their vulnerability to eastern imports. Its important to manufacturing that the steelmakers survive to service their raw material requirements, but its just as important to the steelmakers that they have a manufacturing sector left to supply.

Lets hope that we get some sense and stability in to the steel pricing situation soon, but going back to today, if you need steel urgently now in the UK , be prepared to pay a premium for it.

No comments: