[ Malaya.com.ph ] June 18, 2008
By IRMA ISIP
Prices of local steel had gone up by an average of 50 percent in the past month following the surge in world price of iron ore and the big demand from China.
Filipino Galvanizers Institute Inc. (FGI) president Salvio Perez said the price of billet and steel bars have risen 50 percent, galvanized iron sheets, 35 percent with another 15 percent hike in the offing.
Perez said prices will continue to soar for the rest of the year and may slow down the current property boom.
Perez said the increases were caused mainly by increase in the cost of iron ore, the basic raw material in steelmaking due to Chinese demand in rehabilitating the cities damaged by the earthquake. He said China demand alone will gobble up supply.
Perez said continuing tightness is also caused by limited supply from major steel producing countries such as Japan, Korea, Australia, Taiwan, India and even China have been very tight because of their growing domestic demand.
He said that last April, one of the world's biggest mining company Brazil's Cia Vale Rio Doce increased its prices by 71 percent for its annual iron ore contracts, particularly with China.
Other major mining companies such as Rio Tinto and BHP Billiton of Australia soon followed.
Perez said local construction materials like reinforcing bars, galvanized iron (GI) sheets and other steel-based materials have risen dramatically as imported steel continue to rise sharply in the world market.
Based on the monitoring of the Department of Trade and Industry (DTI), corrugated GI sheets now fetch P55 per linear foot for APO gauge 26 and P28 for Galvalum.
Perez said before April, the price for the same G26 was just P49 per linear foot. December prices were at P42.
By the end of the month, he said, this would go up to P60.
The DTI data shows steel bars now fetch P190 per piece for those with 10-millimeter thickness and P280 for 12 mm.
Perez said the steel mills claim that higher steel prices are not enough to cover gains in raw materials costs.
"Industry experts believe global steel prices will continue to soar as the cost of steelmaking including iron ore, coking coal and scrap have rocketed," he said.
Those movements have affected prices of steel materials like slabs, billets, hot rolled coils (HRC), cold rolled coils (CRC) which have more than doubled compared to December 2007 prices. Slabs and billets are priced from $950 to $980 per metric ton while HRCs are now above $1,000 per MT and CRC at over $1,300 per MT.
The galvanizing industry, which Perez represents, is operating under a cost-push environment because there is no let up in creases in prices of CRC, their basic raw materials
The FGI is meeting with the industry to seek with the government ways to keep the industry viable.
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