Steel prices went up by almost 37 USD per ton during the last four months.

Control on inflation still remains a big challenge for the government of

developing countries. Oil prices crossed the mark of 100 USD per barrel.
World steel production and consumption still continues to grow. Even the
raw materials prices have increased.

World steel transaction prices for certain steel products increased in the first
quarter of 2008. Hot rolled steel coils price increased from $617/tonne in the
month of April 2007 to $915/tonne in the same month for 2008. Hot rolled
steel plate price increased from $788/tonne to $1065/tonne in April 2008.
Cold rolled steel coil price increased from $698/tonne to $985/tonne in April
2008. Steel wire rod price increased from $577/tonne to $852/tonne in April
2008.

The price of a ton of hot-rolled coil steel in the USA hit $482 this month, up
66% from the recent low set in June. Shortage fears are leading to a rapid
rise in steel prices. Prices are rising because of most notably skyrocketing
demand from China’s rapidly expanding economy. Last year, China’s steel
demand rose 38 million tons, the equivalent of the annual steel usage in
Mexico and Canada combined. The more China buys, the less steel is on the
market.

Supply concerns are visible. Some steel companies are adding surcharges or
even renegotiating contracts to raise prices to help offset their higher costs.
Nine out of 10 steel users said suppliers raised their base prices in January.

Other causes for the increases in steel prices are:

• Energy prices have remained elevated, making the energy-intensive

process of making steel more expensive.
• The dollar has been falling for months, making all imports costlier,
including steel.

Steel prices are likely to remain high in domestic and world markets in 2008
after last year’s increases. Rising global demand is adding pressure on costs.
China’s steel product composite price index hit an all-time high 135.17 at
the end of February. Chinese steel production rose by 10.5% in May,
bringing the year to date up 9.4% to 216.1 million tones, over 4 times the
Japanese total.
India’s production only showed a small rise in May of 0.3%, although the
year to date total 4.1% to 22.9 million tones.

In the Middle East, Iran showed a 25% increase in steel production in May
with the year to date total up 3.5% to 4.25% million tones. Saudi Arabian
steel production also increased by 15%, bringing the year to date to 2.1
million tones, an increase of 20%.

Steel prices in the domestic market are expected to remain at high levels in
the second half moving in a narrow range, with only a small chance of a
major slump. Steel prices are “more demand-driven than cost driven”.

The prices of raw materials have also increased

Year/Month Iron Ore Cents/dmtu Steel Coking Coal $/ton

Scrap
2007-M6 84.7 295-300 94.6
2008-M6 140.6 650-660e n/a

By looking at the above statistics, we can say that that world steel price will
increase even further, though it might be stable by the end of the year. Our
present economy, also referred to as ‘Mad Economy’ is in full swing.
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