As many of you are no doubt aware, the CRU Steel Index rose 60 percent in the six months from January to July 2008. This steep increase is just a taste of the new global reality: steel prices will continue to rise. Why? Well, there are numerous contributing factors in Asia and beyond. The recent Western credit crisis is rattling global markets and industrial economies and Uni-span is watching closely to respond to the short and long-term effects of this uncertainty on the steel industry. We’ll report on these effects in our next newsletter.

Factors causing steel prices to rise of recent times include a worldwide shortage of raw materials, such as iron ore and coking coal, with mills failing to keep up with demand – iron ore prices rose 85 percent recently and coking coal prices have trebled since July 2007.

This has flow-on effects to all steel products, one example is hot-rolled steel sheeting, the main product used in automobile manufacturing, which has risen 76 percent in price since January and is reported to be 86 percent higher than prices this time last year. Another example is the 26 percent increase Uni-Span’s steel distributor has passed on for the tube products we stock.

Add to the equation rising energy, fuel and transportation costs and high steel demand in industrial economies like China and it becomes a little clearer why these dramatic trends are impacting on steel manufacturers in Australia.

Many of you will have noticed Uni-Span’s product prices have not increased recently to the same extent as the world market. As we buy new stock at significantly higher prices there is no doubt our product pricing will increase. Our competitors will similarly be affected and if their products happen to be cheaper it will simply be the result of their ‘timing’ of the increases.