Construction, Pandemic and Steel Prices

During 2020, it is estimated that the average price of a ton of steel increased 19%, a rise that impacts the construction industry and is explained by the increase in logistics costs and the suspension of the extraction of the material due to the outbreak of covid-19.

Wednesday, January 27, 2021

Central American businessmen report that during last year, which was marked by the sanitary and economic crisis, the average price per ton of steel increased by $130, going from $670 to $800.

The suspension by covid-19 in the extraction of iron minerals by the main producing countries is one of the major reasons for the increase in steel prices.

Oscar Sequeira, vice-president of the Guatemalan National Association of Housing Builders (Anacovi), told that "... Brazil and Austria are the main producers of iron ore. 'With the pandemic everything was paralyzed in terms of supply and production, and when it normalized on a global scale, the demand for iron was very high and there was an accumulation of orders that shot up prices'."

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The increase in freight costs from China is another factor that is pushing up the price of steel.

Sequeira pointed out that "... for example, the logistic cost of a container shipment from Asia to Guatemala was $3 thousand, but now it exceeds $8 thousand, and there is no provision. There was an increase in shipments and a regionalization of the market towards Turkey and Russia, which caused freight to Latin America to be involved. Freights became more expensive because there is little product returning to China right now by sea, and the containers are full, but have nothing to return with."

By the end of 2020, there were already warnings of rising costs in the logistics sector. CentralAmericaData's publication details that the low availability of containers, which is partly explained by the imbalance of world trade flows, which are still affected by the sanitary and economic crisis generated by the spread of covid-19, would put an upward pressure on prices by 2021.

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