Global Fastener News

Brazil’s Iron Ore Price Jumps 65%; Asian Steel Prices and Fasteners to Follow

John Wolz

Major Asian steelmakers agreed to a 65% increase for iron ore from Brazilian miner Vale effective April 1, 2008. Jikyoon Park, director of purchasing for XL Screw Corporation, predicts another 5% to 10% fastener price increase from Taiwan and another 7% to 15% increase from China in the next three to six months.

Park told FastenerNews.com the iron ore prices will result in “more price increases, a shortage of steel and longer lead times. High prices are here to stay with some small degree of fluctuation either way. There is a lot more upside than downside in price.”

Iron ore price agreements with Nippon Steel Corp. and JFE Steel Corp. of Japan and Posco of South Korea are likely to increase prices to Chinese steel makers as contracts expire.

Wire rod dealers in Taiwan and China have stopped selling in anticipation of getting higher prices as soon as steel mills announce second quarter prices, Park explained.

Taiwan steel producer China Steel Corporation is expected to announce second quarter prices on March 6.

“Our suppliers are predicting that CSC will increase prices 13% or more,” Park reported. CSC has been the lowest price at $150 to $190 per metric ton and the second quarter price could jump $100.

The tight supply will impact factories without large quotas from major steel mills such as CSC and Baosteel of China, Park added. Smaller factories “have no choice but to buy material they need from local wire rod dealers at spot market price,” Park explained.

Subsequently some fastener factories are refusing orders unless customers agree to late August delivery because they cannot get the wire rod they need.
Even the winter weather in China has constricted supply as steel could not be moved from mills to dealers and fastener factories. “The snow storm also damaged many facilities around the country,” Park said.

In just one month, Taiwan material costs have gone by about $96/mt (11%) for low carbon steel; $120/mt (13%) for medium carbon steel; $96/mt (9%) for alloy steel.

Steel prices in China have jumped 5% to 7% since the lunar New Years holiday.

What will happen after hosting the Olympics this summer “is anyone’s guess,” Park said. �2008 FastenerNews.com