Steel Price Deciding Factors
There are enormous factors deciding steel prices in India & some of the main reasons for this hike are listed below.
Supply & Demand
The basic & primary factors in the price of any industry are demand and supply. The same comes to steel production & it is an important factor that decides the price in the steel market. When the production of steel exceeds the demand in the market, the price will automatically go down due to low demand and act as a vice-versa. After COVID-19 and economic activities resumed, steel prices increased based on the raw materials.
Raw Materials Price
Iron ore is the main element of steel. If the primary suppliers of iron ore across the world limit the export of the raw material, then the steel price will be increased automatically. This exactly happened after the Covid 19. Major countries producing this raw material were limited, and steel prices were so high at that particular time. Also, a shortage of other raw materials will be another reason for the steel price increase. Frequent fluctuations in the cost of raw materials will directly impact the price of steel in the market.
Transportation
Transportation for steel production plays a major role in the production and supply of steel in the market. It starts with transporting the raw materials to the manufacturing plant. Once the steel is manufactured & produced and following that it will be supplied to the market for further distribution. All steps involve appropriate logistics leading to an increased steel price due to the addition of transportation cost to the product. It is also determined by country borders and war situations will delay transportation and be the reason for the steel price hike.
Market size
The steel market has been growing for over ten years. Steel is a vital material in construction and is used in many building projects. As our cities and infrastructure continue to evolve, the demand for steel keeps increasing. It’s important to recognize that steel is essential in various industries, making it crucial to understand what factors can influence its price in India.
Exchange Rate
Steel is traded worldwide, meaning it is imported and exported between many countries. The exchange rate refers to how much one currency is worth compared to another, and this can greatly affect the price of steel. When a country’s currency weakens, it can lead to higher steel prices because it costs more to buy it from other countries. Fluctuations in currency values can significantly impact the steel market.
Energy and Power
Producing steel requires a lot of energy and power. This means that any changes in the cost of electricity and fuel can also affect the price of steel. If energy prices go up, it becomes more expensive to make steel, which can lead to an increase in its overall price. Therefore, the costs associated with energy play an important role in determining the final price of steel.
