Introduction
We’ll be covering all the major reasons that resulted in steel being as expensive as it is now. There are numerous reasons for it but the major ones like the overall increase in demand, decrease in production due to global lockdowns, Covid-19, and other relevant reasons.
Reasons:
Steel prices have risen during the Covi-19 induced lockdown period as steel-producing facilities worldwide were either shut down or working with the minimum staff capacity. Mr. Mohit Aggarwal Aastha Group rightly said, “since China is a key player in the dynamics of the demand and supply of Steel, the future trends are very much in its hands”.
Increase in Demand
The supply of Steel got affected terribly and the demand remained constantly increasing which caused an increase in the global demand. The cost of moving raw materials and finished products also increased dramatically due to the restrictions imposed to curb the spread of the Covid-19 virus by each nation.
There have been reports of companies hoarding Steel which worsened the situation. The global economy is expected to recover by the end of 2021.
Lockdown in Steel-Producing Nations
China produces and exports the highest amount of Steel. So the economic events within China have heavily impacted the supply of steel globally, thereby increasing the prices globally.
Manufacturing of steel saw a decline in China due to the precautionary lockdown measures to combat the spread of Covid-19. India comes second in manufacturing and export of steel and the conditions have been similar here. So it is safe to say that, when the top two steel-producing and exporting nations got affected, the world saw a ripple effect and the result was an increase in the prices.
Converse effect of increased Nickel Prices
Mr. Mohit Singhal Aastha also pointed out that the prices of Nickel rose due to the increase in the demand for the production of vehicle batteries, it conversely affected the rise in the prices of steel because Nickel is used in the production of steel. Although only 8-10% of steel comprises nickel, it has still significantly impacted its prices.
Conclusion
Things don’t seem to get better any time soon like everything else. Although there’s hope particularly in India now as various policies and schemes are announced to aid businessmen to boost the economy. A businessman in the steel or related to it business ought to keep the above-mentioned points to formulate a better coping business plan. As it is popularly said, failing to prepare is equivalent to preparing to fail.
Also Read – ARE STAINLESS STEEL PIPES WELL-SUITED FOR DOMESTIC USE?
