Market situation in the international steel trade - supply shortages and exploding costs
We are currently experiencing major supply problems on the world market and, in consequence, huge raw material price increases. This is above all a result of the coronavirus pandemic:
Raw material shortages
The prices for the raw materials and alloy components necessary for the production of steel have in part doubled (e.g. iron ore) or have risen significantly (e.g. steel scrap by 70%).
Decline in raw steel production
In 2020, the European raw steel production figures went down by ten to twenty percent.
Even though the production has been considerably ramped up again by now, it is still significantly lower than the long-time average.
The consequence of this are massively longer lead times, which in turn has a negative impact on the supply capabilities of engineering industry manufacturers.
This situation has resulted in exploding steel prices, which have reached a new record level. This also affects the prices for hot rolled wide steel strip, which is a key raw material for the production of our saw blades.
The following chart illustrates clearly to what extent the steel price has skyrocketed since the Covid-19 crisis. Before the crisis hit, the price had even gone down slightly; since 06/2020, it has hugely increased.
Overview of steel prices over the past five years in €/t:
Overview of steel prices since the start of the Covid-19 pandemic in €/t:
The global trade regulations are also currently seriously affecting the steel trade. High import duties prevent the large-scale import into Europe, whilst China, for example, tries to prevent the output of its domestic steel production from leaving the country.
Furthermore, the production of steel has been severely restricted due to the coronavirus, not only in Europe.
Outlook for WIKUS
Unfortunately, it is currently impossible to predict when the steel market is likely to relax.
Besides steel, other raw materials such as plastic or wood have also been affected by huge price increases and supply shortages, which makes the saw blade and precision circular saw blade production situation even more difficult.
´The partnership with our customers is extremely important to us. We at WIKUS are therefore making every effort to be able to continue to supply you with sawing solutions of the usual quality. For example, we have increased our production capacities and made further investments into the optimisation of the production processes. Due to our functioning supply chains, we do not expect any material shortages; however, we are certain you will appreciate that we cannot negate all of the consequences of the steel crisis and are therefore currently unable to always meet our usual delivery time targets.