US producers warn against steel shortage on the back of rising costs

US producers warn against steel shortage on the back of rising costs

A survey recently concluded by the US Steel points out to a threat of worldwide raw material shortage and lack of availability, in case the rising trend of input costs continues, as such situation will eventually leave no option for the mills other than concentrating on producing higher margin products. The report emphasizes that in case the mills fail to pass this cost rise onto the manufacturers and further processors, there is no other alternative than switching their production scope to most profitable products, in order to survive through this bottleneck. There is no doubt that such bottleneck is arising from the surging demand for steel from China. Situation currently overwhelming the international markets is certainly created by the impact of Chinese industrial growth on the price and availability of steelmaking raw materials globally. Cost of all iron ore, nickel, steel scrap and shipping rates had seen sharp rises in the past few months. In the UK, gas and electricity prices have surged since the summer. Coke is already in short supply in some markets. Such rapid and substantial increases across the whole range of inputs can only be described as unprecedented, according to Steve Rutherford, Managing Director of Bridon, one of the world's leading producers of steel wire. "While there is no shortage of steelmaking, rolling and drawing capacity, particularly in Europe, the extreme tightness in raw material supplies is beginning to threaten steel shortages." Some EU steel companies have already announced production cutbacks. If we cannot pass on our cost increases along the entire length of the steel supply chain then there is a real risk of supply shortages developing” he adds.