After a year, the price of iron drops by 35% and steel by 28%: will civil construction become cheaper?

According to data taken from the Investing portal, in just one year (52 weeks), iron had a drop of at least 33% while steel had its negative variation of around 28%. 

Despite the drop in the metals sector, as they were at their peak during the Covid-19 pandemic, inflation in the civil construction sector is being one of the largest ever seen. During the month of April of this year, it is estimated by data shared by the IBGE that inflation is around 1,21%. The 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 the last year in the sector was higher than health and education, leaving companies in doubt about the validity of some investments. However, iron and steel face sharp declines. 

Boom in construction has been going on for a while 

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

Will civil construction lower prices? What will happen to iron and steel? 

As reported by the Brazilian Chamber of the Construction Industry (CBIC)), it is estimated that there was a drop of at least 42% in all contracts traded in steel. And this represents a slight drop in the civil construction sector since March. 

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In short, despite the fall that the metal has been suffering over the last few months and its accumulated 52 weeks, it is estimated that its price for the consumer has risen by at least 72%. That is, your current fall it is not being enough to foment the industry. 

CBIC does not hesitate to say that the numbers are being affected because of the price and high inflation of civil construction. Building materials are hard hit by the crisis. 

What is the price variation for steel and iron coil? 

Despite the fact that steel is down 28% of its value, it is estimated that the variation is between 970 and 1.945 dollars. Now it is being quoted in the $1200 range. The variation presented is representing the values ​​of the last 52 weeks. In relation to iron, which is being traded at around 133 dollars, it had its variation in this same period of time around 91,98 to 219,77.

Civil construction is heading in a direction that is still uncertain and prices remain high. However, economic specialists warn that the scenario of an election year could significantly change the paths taken, everything will depend on the new candidate chosen to take the presidency for the next four years. 

War between Russia and Ukraine has been negatively affecting the market 

The war that is taking place between Russia and Ukraine, despite being on the other side of the world, has been negatively affecting the market, since we are in an increasingly globalized and interconnected world.

After all, conflicts between the two countries would have erupted during the year 2022 in February. It happened due to the fact that the Ukrainian president would not be obeying what is foreseen in the contract between both countries on the participation of military groups, such as NATO. 

The war accentuated economic crises and multinational inflation. This situation is affecting not only civil construction but also the agroindustry, as there was a lack of fertilizers on the market. That's because the Russians are one of the main exporters.