Raw Material Costs. The galvanized steel coil begins with steel billets which are formed from iron ore and other alloying elements. China is a major importer of iron ore, and swings in world iron ore prices have a direct link to the cost of steel production. As iron ore prices soar, steel mills encounter higher raw material costs, which are then transferred to the price of galvanized steel coils. The other factor is energy (coal and electricity) that contributes to the costs for the steel-making and galvanization processes.
An increase in energy prices can increase the price per ton of galvanized steel coils. Producing Capacity and Supplies. Chinese steel production has huge volumes; many steel mills are located in China. Both the steel output in these mills and the amount of galvanized steel coils available to the market are directly influenced by the scale of production activity. Price may get downward pressure, if over-supply results from the over-production.
If, on the other hand, production is interrupted — say, because of environmental regulations that compel mills to lower output or to maintain machines — the supply will contract, contributing to a price hike. Also factor in the geographical location of production factories. Mills near ports will not only have less capital-intensive transportation costs for raw materials, they may even be able to offset their costs in a way that affects prices. Market Demand.
There are diverse sectors that are in need of galvanized steel coils in China. Galvanized steel has become one of the common steel materials used for roofing, wall cladding, and structural components in construction. Increasing urbanization and the development of infrastructure projects like such high-speed railroads, bridges, airports, etc.; are also major drivers of demand. The boom in construction activity will increase the demand and therefore the price of galvanized steel coils through the increase of demand for galvanized steel coils. Car companies use galvanized steel to frame car bodies including the body and components to help make cars more durable and less rusting, and this is a top consumer in the automotive industry.
There are also changes in automobile output, driven by consumer purchasing trends, government regulations on vehicle emissions and economic conditions, that influence demand in the use of galvanized steel coils, including their price. Trade Policies and Tariffs. China’s trade policy and tariffs on steel imports and exports affects the price per ton steel coils significantly. Tariffs or quotas for exporting, for instance, can constrain the amount of galvanized steel coils the country exports to foreign markets from being sold abroad, creating more for consumption at home and possibly causing a pull downward on prices. Or, import tariffs on raw materials or competing steel inputs may shield the domestic steel industry but possibly push up costs of production resulting in higher prices on galvanized steel coils.
Furthermore, the trade disputes and anti-dumping measures from foreign countries on the Chinese steel product can disrupt the market stability and thereby could influence the balance of supply-demand and prices in China. Quality and Specifications. Steel coils with high galvanized wire characteristics and specs are highly price determinant. Higher-quality coils with a superior surface finish, uniform zinc coating, and a good mechanical property are more costly. Other specifications include thickness, width, and thickness of zinc coating. Because thicker coils with a larger zinc coating are more expensive to produce, and hence charge a higher price per ton, the price of the coils. Customers with particular needs in particular for their application may be willing to pay more for galvanized steel coils that satisfy the specifications they desire.
Actual market price trends in China today. The price per ton of galvanized steel coil in China [specific time period] has also been fairly volatile. Prices were quite stable early in the year following sustained construction and vehicle demand. But as the year has developed, other factors including increased iron ore costs, curbs taken to production in some parts of the country, and shifts in trade regulations have added to swings in prices. Prices are high even in some places, where a supply squeeze over production has held back supply.