Price Revision + Trends and Developments of Raw Material Prices
With effect from 26 July 2021, there will be another price increase in our METALSISTEM products. The price increase is introduced to combat the rising cost of both steel and powder-coating raw material.
Current market trends, evolved over the past 8 months, are a direct consequence of international dynamics, which have brought a doubling in steel prices. Some reasons for this upward pressure are:
- The COVID-19 pandemic, commenced in 2020, caused a slowdown if not a closure of many steel mills throughout the world. This has severely reduced the capacity of the industry to satisfy global demand;
- At the same time, China – the largest steel producer in the world, with 65% of global production – is called to satisfy a GDP growth rate of 20% which has consequently all but halted export activity to satisfy internal demand;
- The strength of the Chinese GDP growth is such that it is forced to import steel in order supplement its own production;
- Alongside the strength of the Chinese market, the resumption of industrial activities in Europe and the United States, placed the supply of raw material under further stress;
During the course of 2020, steel service centres throughout Europe ran their stocks low to cope with reduced economic activity. The subsequent pickup in demand, generated a concurrent need for stock replenishment which has overwhelmed steel supply capacity.
This is an overview of the conditions that have generated an unprecedented shortage in raw material which, according to EUROMETAL (European Steel Distributors Association), will last at least for the duration of 2021 and it is expected to continue to cause erratic market conditions with a strong upward pressure on prices together with disruptions in deliveries of material and of quotations from the steel mills. The dynamics that have been unleashed, see weekly price updates without forewarning, at times resulting in cancellation of confirmed orders. Steel mills are also cancelling all previously agreed commercial conditions and demanding payment on order.
While steel prices have already doubled as this announcement is written, SIM WIN LIANG has taken effort to ease the sharp increase across the rest of 2021 and into 2022, with the following increment schedule:
- 26 July 2021 Price Increase (by 9%)
- 01 Sept 2021 Price Increase (by 10%)
- 07 Feb 2022 Price Increase (by 10%)
- 30 May 2022 Price Increase (by 6%)
- Estimated Early Sep Price Increase (around 10%)
From a commercial point of view, SIM WIN LIANG hopes that the situation will be resolved by the end of 2021 when most countries have complete their vaccination programs and that the various workforces have resume normal production.
An update for 2022, the Russia-Ukraine war has caused unrest and uncertainty in Eastern Europe, where our steel mill sources are located. This impacted the steel supply immediately, which resulted in another price increase (#5). SIM WIN LIANG hopes that the geopolitical issues will subside soon and that both countries can resolve them peacefully.
SWL Management Team