The Price of Steel

its a bit cheap now isn’t it?

how does that effect the bike industry then?

Ask him

Dirt cheap – can’t shift the stuff.

Should mean things are cheaper but there not.

Ask who?

The raw material cost makes pretty much piss all difference to the retail cost of parts, it’s the manufacture process that costs, and of course all the men in the middle. Oh and currencies in our global world.

OK, wierdly I can now see that pic 😳

The point generally is to try and use as little steel, or any other material, as you can get away with when you make a bike. 10 kg of mixed metal is worth pretty much nowt in the scheme of things whether raw material prices are high or low. The less metal you use the more effort and cunning you need to put in to make sure it all works. And the more of the effort you make the more the cost goes up, and the more the cost goes up the, the number of buyers who are prepared to pay a premium for those values decreases, so you have to make your product viable with fewer sales – and to make that work you have to charge more.

People hate to think it, but most of what you are paying for when you buy ‘things’ is ‘people’ and ‘time’ and ‘ideas’ not ‘stuff’. The direct cost of the raw stuff, and even the direct cost of manufacture are pretty much irrelevent.

then why were the most recent rounds of price hikes justified as “due to the recent spiraling costs of raw materials”?

if they simply said “this is due to the cost of Labour” then I wouldn’t be so bothered.

cost of sipping was probably a big factor, but that should be droping as well.

“due to the recent spiraling costs of raw materials”?

because thats what we want to hear.

I buy steel everyday and I can assure you that price drop isnt reflected in end product sales.
Yet.

There is no demand for steel, as reflected by my, and 2,500 others all loosing there jobs this week. The Ore has been forward ordered at prices that were set last year, so won’t have fed through much. Most of the major manufacturers are sitting on stock and making as little as possible and just shifting what they have for whatever they can get just to keep the cash flowing.

One of the problems is you can’t just shut a blast furnace down, it takes a long time to take it offline and then put it back on line.

Also remember that the prices tend to be set in US Dollars.

energy costs

I visited the Steelworks at Port Talbot for my A levels a few years back…they showed us (one of?) the blast furnaces and basically said if it were ever shut down, the building would collapse as it cooled down unevenly. Its the one you can see blazing from the M4.

They weren’t too interested in us during that visit as part of the conveyor had failed, which resulted in a cartoon style strip of buckled steel that was meant to be neatly rolling onto huge spools for Vauxhalls (deceased) Luton plant. The breakdown was costing them about £500,000 a minute…strangely enough its quite rare yet something had happened to stop production for the last three visits our school had made 🙂