Steel prices to rise 10-15%

Steel prices to rise 10-15%

Steel prices this year are forecast to jump by 10-15 per cent, due to rising oil prices and the global shortage of raw materials.

Published on January 9, 2008

Siam United Steel executive vice president Payungsak Chartsutipol yesterday said steelmakers had been hit by higher costs for energy and raw materials.

"Steel production costs are continuing to rise. For example, the price of iron ore has increased by nearly to 30 per cent from last year, and transportation costs jumped 50 per cent due to rocketing oil prices," he said.

He added that the shortage of iron billet (ingots) in Southeast Asia had also pushed up prices.

Yesterday, the billet price hit a record high of US$660 (Bt21,700) per tonne.

A steel-industry source said the higher billet price was partly due to insufficient supply from Ukraine and India and price speculation in the market.

In addition, steelmakers have been finding it tougher to locate raw materials since China's Finance Ministry gave notice of higher export tax rates for steel and steel-related products last month.

Payungsak said Beijing would like to reduce the number of outdated plants and encourage steelmakers to produce more high-value products, which should help stabilise prices.

According to Thailand's Iron and Steel Institute, China's average export tax rates have gone up from 15 per cent to 25 per cent. The tax rates on wire rods and bars have risen from 10 per cent to 15 per cent.

The changes will hit 34 finished and semi-finished steel products.

The Chinese government will also raise export taxes on raw materials for steelmaking such as coke, pig iron and direct-reduced iron ore from 15 per cent to 25 per cent.

This will push the export tax on ferro-alloys to 20 per cent, from 10-15 per cent.

Meanwhile, Payungsak said the new government should continue the Board of Investment's policy to promote upstream blast furnaces.

He said the Kingdom needed high-quality blast furnaces, in order for the steelmakers to feel more secure about their raw-material supplies.

Chalida Ekvitthayavechnukul

The Nation