Hangzhou’s manufacturing costs to spike

Hangzhou’s manufacturing costs to spike

China’s Hangzhou Steel warned that its steel production costs will increase by at least RMB 800 million ($96.6 million) this year due to the foreign iron ore price surge. The company then added that if the global iron ore price causes similar price increases in domestic iron ore, pig iron and scrap, then Hangzhou Steel's total raw material procurement cost may balloon more RMB 1.7 billion ($210 million) year on year in 2005. Hangzhou Steel representatives expressed that though the market price of the company’s products has also risen, it is not enough to offset the soaring raw material costs. Hangzhou Steel will keep a close eye on the iron ore price trend in both the domestic and foreign market in order to timely adjust the company’s inventory situation, payment strategy and price strategy. The company will also optimize its raw material surcharge structure to weaken the influence of rising iron ore prices.