Forging Industry to See a Wave of Rising Steel Prices from July 1
Forging Industry to See a Wave of Rising Steel Prices
Fresh data released by Steel Mint mentioned that steel prices have hiked as never before. This surge has become a new challenge for the forging industry. Forging Companies like RSE FZE which uses high-quality stainless steel as a raw material for its forging products are having a huge hindrance as there has been a 30% rise in the steel prices which is being seen from the second quarter itself. We at RSE FZE are specialized in power systems engineering and supplying (forging vs casting) forged machine parts through various types of forging methods (open die forgings). We also have the latest techniques of mechanical seals, abrasive blasting, etc.
Up to 75% of raw materials used in the forging industry is steel, this metal is having a direct relationship with the forging industry. That means if there are any changes in the steel industry, there would be effects on the demand and supply in the forging industry.
With these developments taking place, one could not expect rapid growth in the forging industry in the coming days. There are several industries like automotive (EVs, gravity batteries, and others) that rely on the forging industry to supply high-quality forging parts to be used in its industrial applications. Till then, OEMs are compensating for the rising cost of steel. But that won’t be the ultimate solution to this problem.
About 60 – 65% of the business for the forging industry comes from the automotive sector. However this major source (automotive) of income for the forging industry has revived, but the demand from other sectors like the power and energy industry, aerospace, oil, and gas has yet to be met.
As we export the steel from neighboring countries like India, we have decided to supply the best quality steel forging solutions at the best prices in comparison to other forging companies available in the United Arab Emirates (UAE). This is achieved by cutting our profits and also exporting steel from other countries like China which delivers the same quality of steel as India but at a reduced price.
This is also been seen in the UK Market, wherein China is ready to supply steel at lower prices to the United Kingdom with the condition of removing the trade protections. But the UK is not willing to do so, as this will not only hamper the UK Steel Industries but also it will lead to unemployment.
Being successful in facing each and every situation, the UK is planning to manufacture clean steel that will have net zero emissions (low carbon emission) by the year 2030. The UK mentions in its report that 2.7% of the greenhouse gases are emitted by the British Steel Sector. Various environmental issues can be managed by the implementation of proper environmental management solutions. Even the UAE, with its energy transition to renewables due to rising oil prices, is still having demand for steel. With the implementation of smart buildings in UAE, the country is advancing towards a sustainable future and thereby attaining energy efficiency in UAE.
Climate Change Committee will be involved in achieving the country’s goal. It will hence become the first country to produce low-carbon steel around the globe. It is found that renewable energy can reverse the effects of climate change. These clean sources of energy in the water, wind and solar energy include the installation and applications of hydraulic turbine, wind turbine, solar panels, floating wind turbine (history of wind turbines), etc.
The steel price today is not the highest, as the prices are going to increase day by day. Forging Companies in UAE are facing this issue because they do not purchase in quantities and the companies who are manufacturing and supplying steel are asking for a prior payment which is directly affecting their cash flows.
To combat this situation, the Association of Indian Forging Industry (AIFI) has requested for a solution by giving a letter to Narendra Modi regarding their concerns over rising steel prices. This organization body has asked for immediate action in order to save the world from another crisis after the world energy crisis. India is the second largest supplier of steel after China.
It is important that the Indian Government should intervene as RSE FZE believes that steel manufacturers are indulging in a practice of price cartelization and its time for the government should regulate steel prices. If this situation is taken lightly, then the whole globe will need to face the consequences of the major supplying of forged and auto components. With the increase in global energy industry investments and offshore wind energy investments, the demand for steel and its products will rise.
What are your views on this? Let us know in the comments section below.
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