10/06/2008
The Australian steel market is currently highly volatile .We have been hit by rapid escalations in our purchase prices this calendar year. This has flown through to all our steel based componentry (e.g catches,caps) as well.
The market appears to be driven by:
- Raw material cost increases. Ore and coal prices have been driven as mining companies struggle to meet demand
- Shipping cost increases
- Increased demand worldwide but especially in China
- Application of tariffs to Chinese steel exporters by their government to keep steel in the country and encourage domestic value adding
- Good old fashioned price gouging by the Australian steel mills. The ACCC allowed the merging of the two main steel milling entities in Australia in the previous year which has left them with unprecedented market power
To date we have had two general rises on pre-galvanised material (R.H.S and rail sections) totaling 21%.Hot dipped product has risen by up to 33%.
What is more worrying is the further round of price rises flagged for the rest of the financial year. Purlin and iron prices will rise by at least 20% in July. Similar rises have been flagged by Australian suppliers for tubular, structural and reinforcing for the period between May and July. (That is pretty much all steel categories).
Many of our clients are choosing to bring forward their planned stockyard and shearing shed purchases to avoid the inevitable steel price rises.
Most are choosing finance options to beat the steel price rises and to maintain their cash flow.
Andrew Hunter
Director
Prattley Livestock Equipment