Steel price volatility


Typically, the low season months of construction, steel consumption is quite low. This year, though brought into construction steel, but very little purchasing power to rise again. Many signs that steel prices are sliding as "the car wound down" in 2008.

Continuous prices

From late May 12-2010, businesses began to increase steel prices rose slightly to 300,000 VND per ton. From January 1, 2 and early in March, the price of steel increased continuously up to 4-5 times for a total increase of up to 2 million per ton. We assigned at the factory price of steel (excluding VAT) has reached 17 million per ton, steel prices in the market increased 18.8 million - 19 million per ton.

 According to figures from the Vietnam Steel Association (VSA), from the beginning of the year, steel consumption growth abnormalities (40% -50% increase over the same period last year) when construction demand is low. Purchasing power has contributed to rising steel prices increased continuously in time and vice versa, the price increase makes the collection agent for consolidation, pushing prices up further.

Steel makers explain the cause steel prices due to raw material price increases from early embryonic world situation in 2011 and exchange rates, interest rates, electricity ... are going to rise, the price of steel will increase further. However, as calculated from experts, May 1-2011, ingot world has moved up a few dozen dollars per ton, up to 600-610 per ton.
At that time, the steel production plant is still raw material reserves for about $ 580 USD per ton. Earlier in February, the world price of billet increased to 690 USD per tonne, but by the end of February dropped to 660 USD per tonne and currently stands at 670 USD per ton. A ton of steel is about $ 14 million, plus the cost of producing about 1.5 million, calculated to cost about 15.5 million per ton.
Factory selling price of about 17 million per ton, which was profitable. That is the price of billet increased, while that of steel units sold in the market by using low cost raw material sources from January to much higher interest rates. Also, according to VSA, the steel production plant is 60% using embryonic material in the water and lower cost due to shipping costs so much higher interest rates.
Risk of repeated incidents in 2008
Lessons in 2008 for the steel market is still there: In the first months of 2008, the world price of steel increased continuously, sometimes up to a thousand dollars per ton, followed by domestic steel price increases tens of million ton, to 22-23 million per ton. When domestic steel prices started to rise, many business people rushing to collect steel inventory numbers increased 5-10 times normal, as prices had reached "peak", they would not sell because the price expectations continued to rise. 8-2010 to May, world steel prices fell to 330 USD / ton pull domestic steel prices plummeted.
This time, the commercial enterprises, steel agents have "embraced" large quantity, is hosting a few dozen businesses to hundreds of thousands of tons, loss of at least several tens of billion (mostly bank loans is .) Consequently, many steel companies to trade "products approved in defeat."
This year, the situation also changes under the same direction. Evidence that firms actively trade stocks in large numbers, while demand may be building. According to reports from the VSA, in the month 12-2010, consuming 437,000 tons, up next month to 469,000 tons 1-2011 and in February last was 475,000 tons.
Meanwhile, many businesses said the construction industry to this point, very low demand for construction, major projects may also have positive signs. Mr Nguyen Tien Nghi, vice chairman of VSA, said the last time both commercial businesses and investors are buying buildings steel stocks amid fears the price of steel will increase further. Construction investment situation in foreign countries as well as significantly reduced the price of billet material world with signs of decline. In addition, the pressure to tighten the Government's investment, the bank loan problems ... also a large effect to the sale of steel next time.
Steel inventory reduction

According to VSA, the finished steel inventories in the business association membership is about 250,000 tons (normal to above 300,000 tonnes), by contrast, the amount of steel materials used by businesses to store 500,000 tons. Forecasting steel consumption in the coming months will be significantly reduced.

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