21 March, 2008

Steel cost Increase - dramatic!

Roberto is just back from a trip around suppliers of steel. Suppliers are confirming all suspects we had before sending the newsletter:
- they do not quote steel for deliveries after July - they have no informations whatsoever. Future is pitch black.
- the immediate increase is high (it's not just 5% it's more than 20%)
- in return this is "good news". Why?
  1. the most pulling economy of the world is china
  2. if china buys the steel before us, we get what's left, therefore we have to pay something more. In this case the increase would be around 3 to 7%
  3. in this case, the increase is so dramatic that is originated BEFORE chna purchases. Therefore our chinese competitors will suffers exactly the same amount we do.

as you may know, the increase of cost of steel in transferred to the customer by us without making a margin on it. this means that is steel increase of (ie) 100%, our shelving may increase (ie) 70%.

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