Since June last year, the price of raw materials such as steel, crude oil, copper, iron, aluminium, coal, chemical materials and timber, continues to increase.
Australia, which supplies an estimated 60% of Chinas imported iron ore has been the major beneficiary of the price rise, despite the recent trade bans applied by China on a range of agricultural products such as barley and seafood.
That said, in the civil and construction industry we are all hurting. Steel is an essential material for all businesses, from cars to buildings and everything in between, it is a valuable resource.
So, what has changed in the industry, to see these prices soar?
Covid-19 has boosted construction across the globe, and the federal governments Homebuilder Scheme is said to be putting extreme pressure on building supplies.
Australia is in the midst of a critical timber shortage due to a surge in demand during the COVID-19 pandemic on the back of devastating bushfires. The shortage is causing timber prices to skyrocket.
TFH Hire, are the only Australian company that manufacture 90% of our own product, we rely on exports of raw material such as steel from overseas.
Company director Brett Thomas gives some insight on the challenges the company is facing.
Our priority is keeping our stock levels replenished, to meet supply and demand. We have never seen our stock levels so low. At present we are producing 600 panels of Mesh Fencing per day (1.5km) that amounts to 7.5km per week.
The challenge for us is keeping cost down and that is next to impossible as pricing continues to increase.
TFH Hire Services long-term steel trading partner for the last 20 years has reported that some of the price increases are result of slow production and delays in shipping.
Currently all Chinese steel mills that produce our pipe are running at a 15 % capacity. During the pandemic, many banks lost millions of dollars, through investments, and are not funding the majority of the mills. Therefore, mills can only produce what they can fund themselves.
Shipping cost on top of this have increased by over 200%. Delays to shipping are caused as ships in all Chinese ports have a mandatory staff testing for covid. The wait period is 35 days.
Brett Thomas states that although company has had to pass on some price increases, the long-term loyalty trust and relationship with customers is what is keeping the wheels in motion.
Business Development Manger
July 5th 2021