By JOHN HARDING, OF FIRBER ENGINEERING LTD
I am sure that we’ve all heard about the effects of China’s economy on global warming, but there’s another effect that’s closer to home for most skip hire companies – the effect on steel prices.
Iron ore prices have been rising steadily for some years now, during the period 2005-7 by 30%, but this year the situation has changed and prices for Iron ore rose by 66% in January. Unfortunately that’s not all as prices for coal and coke used in the manufacture of steel have also increased by as much as 100% over the last 3 years.
How will this affect you? In the past steel went up in the Spring and came back down again in the Autumn. “Steel prices have risen and fallen before”, I can hear you say - but this year is different.
For most of the period 2005-7 the cost of steel used to make skips was in the range £380-430 per tonne. The current price is an average of £580 per tonne and is expected to be £730 per tonne by the end of July. These increases are on a different scale to previous increases and are expected to stick.
Why is this year different? It has finally dawned on the world that there are 3 iron ore producers who control about 90% of the world output and this year they realised that they could start flexing their muscles a little more. Demand is outstripping supply, forcing up the price. The large miners have plans to increase production, but these plans take several years to come to fruition. New railways are being built, new bulk carriers take time to make and in the meantime the Chinese economy keeps growing apace. So even when the new capacity comes on stream, will it reduce prices or just enable the miners to keep up with the demand?
This means that the price of your skips is going up permanently and probably by 30-50% above last year’s prices.
You will find further information on prices at: http://tinyurl.com/36pd4b
