It’s a scary time. When constantly price of steel is going up, freight is going up. This is not only with Petron; it’s overall with other traders too. Import prices are climbing up for many reasons:
* Raw material price
* Currency rate going up
* shipping cost has gone up tremendously and still on rise
We are seeing the same trend in the US too somewhat. Like we saw in conduits the domestic increased their price recently by 25% from Feb to March 2010. Effect in domestic could be delayed by 60 days simply if the demand is still low than people who has inventory is dumping their product or manufacturers still hungry and doing whatever it takes to run their mill. But soon or later, they all need to level out. More and more distributors will respond to market change in price more quickly because we are seeing companies in last 12 month has significantly reduced their Inventory level. So no one is carrying excessive inventory and has the holding power to keep the price low.
We have constantly looked at sources beyond China but there aren’t too many options out there:
• South America and Mexico is not in the game anymore. You can’t buy anything from that market in fact we sell to that market from China.
• Turkey you can only buy raw materials like Rebars, wire rod but that is also going up.
• India was somewhat competitive but Indian economy has been on uprise plus pressure on currency. From April 2009 to now the currency has appreciated from $50 to $44.20 appreciation of 12% or more.
• We explore Malaysia, Vietnam, Philippines and other Asian sources but they are not workable to either they don’t have infrastructure or they have to depend on China for their raw material source.
So for now, we have to deal with what we have going on and hopefully sometime soon price will stabilize.
Best,
Niraj Balasaria
Petron Pacifc, Inc.
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