Steel price hikes will hit petrochemical projects

Ras Laffan cracker.JPGPrice contract mechanisms for iron ore were recently altered to reflect spot prices and commentators agree this could result in big hikes in steel prices. As petrochemical projects are composed largely of steel, it is pretty obvious that project costs will rise.

Today’s Financial Times quotes Lakshmi Mittal, chairman of the world’s largest steelmaker, ArcelorMittal, saying that the changes in pricing for iron ore could push the cost of steel production up by a third in coming months. The company is already pushing through price rises. It won’t be long before this filters down to the contractors.

Project costs have fallen sharply during the downturn as the previosly overheated construction market collapsed. Let’s see how long it takes for costs to rise once again.

Image – the Ras Laffan cracker by night, Qatar

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