Steel companies are passing on double-digit price increases to their customers, prompting protest from buyers, including General Motors, about both the pace of the run-up and the addition of supplemental surcharges to existing contracts, Dow Jones said, citing a report in Friday’s Wall Street Journal.
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The report said the increases are most intense in the US though prices are rising around the world. In China, steel prices rose 20% for some products in the past year, while prices for exported Japanese steel increased 13%. South Korea-based Posco this week reportedly said it would raise domestic prices of hot and cold-rolled steel products 14% starting February 9. Prices in Europe are flat compared with a year ago, but are expected to rise this year, the report said, citing independent New York-based analyst Charles Bradford.
The Wall Street Journal reportedly said China’s demand has boosted steel prices much as they have boosted those of other raw materials – Chinese consumption rose 30% last year, and the fast-growing nation now consumes one-third of the world output of rolled steel. Rising raw material, energy and shipping costs also have prompted the rise.
According to the report, the weak US dollar is playing a role, limiting the purchasing power of American customers to buy steel from foreign producers, thereby safeguarding the rising prices of US steelmakers. Ocean-shipping rates have more than doubled in some markets in recent months, sheltering domestic supply and demand in many markets around the world. Prices for iron ore, a main ingredient in steelmaking, are rising 19% in some cases, the report added.
In the US, steelmakers boosted first-quarter prices on benchmark hot-rolled steel to between $US350 and $370 a ton, averaging to a 12% increase from the December price of $320 a ton, Merrill Lynch analyst Daniel Roling told the Wall Street Journal. Higher prices are also slated for the second quarter, the report added.
