After A Year, Iron Prices Fall 35% and Steel 28%: Will Construction Costs Decrease?

According to Data Extracted from the Investing Portal, in Its Accumulation of Just Over a Year (52 Weeks), Iron Fell by at Least 33% While Steel Had a Negative Variation Around 28%.

Despite the decline in the metals sector, which peaked during the Covid-19 pandemic, inflation in the construction sector is one of the highest ever seen. During the month of April this year, data shared by IBGE estimates that inflation stands at around 1.21%. This value is lower when compared to the year 2021, when it was in the range of 1.99% in the same month. The accumulated inflation for last year in this sector was higher than in health and education, leaving companies uncertain about the validity of certain investments. However, iron and steel are facing a sharp decline.

Rise in the Construction Industry Has Been Happening for a While

The rise in the construction industry has been occurring since the beginning of the pandemic. It has been five months since the Jovem Pan portal published an article on the subject, see:

Will the Construction Industry Lower Prices? What Will Happen to Iron and Steel?

According to what was reported by the Brazilian Chamber of Construction Industry (CBIC), it is estimated that there has been a decrease of at least 42% in all negotiated contracts for steel. This represents a slight decline in the construction sector since March.

In summary, despite the decline that the metal has been facing over the past few months and its accumulation of 52 weeks, it is estimated that its price for the consumer has increased by at least 72%. In other words, its current decline is not sufficient to stimulate the industry.

The CBIC does not hesitate to say that the numbers are being affected due to the price and high inflation in the construction sector. Construction materials are being severely impacted by the crisis.

What Is the Price Variation of Steel and Iron Coils?

Despite steel experiencing a 28% drop in value, it is estimated that the variation ranges from 970 to 1,945 dollars. It is currently quoted at around 1,200 dollars. The presented variation represents values from the last 52 weeks. In relation to iron, which is being traded at around 133 dollars, its variation during the same period was between 91.98 and 219.77.

The construction sector is heading towards an uncertain path, and prices remain high. However, economic specialists warn that the election year scenario could significantly change the course taken, depending on the new candidate chosen to lead the presidency for the next four years.

War Between Russia and Ukraine Is Negatively Affecting the Market

The war occurring between Russia and Ukraine, despite being on the other side of the world, is negatively affecting the market, considering we live in an increasingly globalized and interconnected world.

After all, the conflicts between the two countries erupted during February 2022. This happened because the Ukrainian president was not complying with what was outlined in the agreement between both countries regarding the participation of military groups, such as NATO.

The war has intensified economic crises and multinational inflation. This situation is affecting not only the construction sector but also the agribusiness, given the shortage of fertilizers in the market since the Russians are one of the main exporters.