Understanding the Steel Industry

The charge price squeeze (sometimes called the value cost squeeze) is quite a well-known phenomenon to most steel industry strategic planners. It is just a reality that has been around for quite some time. It means the long-term trend of falling steel industry product costs, as evidenced by the falling end product prices which can be seen as time passes. On this sense - notwithstanding the falling revenue per tonne - it ought to be remembered that the squeeze does benefit the industry to keep the price competitiveness of steel against other construction materials including wood, cement etc. Falling costs. The central assumption behind the squeeze is the cost per tonne of your steel product - whether a steel plate or possibly a hot rolled coil, or even a bar or rod product - falls typically (in nominal terms) from year upon year. This assumption obviously ignores short-term fluctuations in steel prices (e.g. due to price cycle; or due to changing raw material costs from year upon year), because it describes a long-term trend. Falling prices with time for finished steel goods are at complete variance using the rising prices evident for many consumer products. These falling prices for steel are however due to significant changes in technology (mostly) that influence steel making production costs. The technological developments include: modifications in melt shop steel making production processes. An incredibly notable change throughout the last Twenty five years continues to be the switch from open-hearth furnace to basic oxygen furnace and electric-furnace steel making. Open hearth steel making is not just very energy inefficient. It is usually painstaking steel making process (with long tap-to-tap times) with relatively low labour productivity. The switch from open hearth furnace to basic oxygen process or electric arc furnace steel making allowed significant steel making cost improvements - along with other benefits including improved steel metallurgy, improved environmental performance etc. This is an excellent instance of a historic step-change in steel making technology creating a major influence on production costs. the switch from ingot casting to continuous casting. Here - aside from significant improvements in productivity - the key benefit of investment in continuous slab, billet or bloom casting was a yield improvement of ~7.5%, meaning much less wastage of steel rolling mill performance improvements when it comes to energy efficiency (e.g. hot charging), reduced breakouts, improved process control etc resulting in reduced mill conversion costs less set-up waste through computerization, allowing better scheduling and batch size optimization lower inventory costs with adoption of contemporary production planning and control techniques, etc. Their list above is supposed to be indicative rather than exhaustive - but it illustrates that technology-driven improvements have allowed steel making unit production costs to fall after a while for many different reasons. Going forward, the implicit expectation is costs continuously fall as new technological developments [e.g. involving robotics, or near net shape casting] allow. Falling prices. The mention of term price inside the phrase price range squeeze arises because of the assumption that - as costs fall - hence the cost benefits are given to consumers as lower steel prices; and that is that behaviour which as time passes helps you to take care of the cost competitiveness of steel against other recycleables. The long-term fall in costs is therefore evidenced by way of a long-term squeeze on prices. To read more about sat thep xay dung please visit resource: read here . read here


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