Steel

[Thekingin64]

This is something I've pondered for a while and not sure of the answer or if it makes any difference.

It was in the news a while back that European firms are choosing cheaper, (supposedly) lower quality Chinese steel over European steel, fuelling closure fears for British Steel plants. Likely similar happening in the US as well. I just wonder, where would the major Steel coaster companies source their steel from? I'd assume Chinese companies would use Chinese steel but would the likes of Intamin or Vekoma choose Chinese steel over European steel? If so, could we see production line shortages caused by Coronavirus if the Chinese plants are affected?

Not that I've got anything against Chinese steel, just a thought.

EDIT: With British Steel just being bought out by a Chinese company, could this cause changes of supplier if this takeover makes British Steel cheaper?

 

[Antinos]

I have a few mostly disorganized thoughts on the subject...

My friend works in the steel industry and has been baffled by the recent state of the industry. Knowing how steel is made, she has no idea how the Chinese steel companies are producing steel and turning a profit with how cheap their steel is.

I frequently hear "low quality" and "Chinese" paired together in the same sentence and the more I hear it, the more it sounds like thinly veiled racism. China is a world superpower and there are literally millions of brilliant people turning the gears of industry. Surely someone in their steel industry has access to global quality standards and is smart enough to implement them. I can't imagine manufacturing processes or inspection processes would differ between countries in a matter that would yield low quality steel as many seem to think.

Regarding COVID-19, I don't think the amusement industry is large enough to exhibit any signs on the manufacturing side of the ripple effects of the virus. I can imagine that companies are able to scramble to acquire any remaining quantities of steel needed, even if by special means, before any effects are felt. I'm sure other industries, like automotive will have to deal with supply chain shortages much more than they currently are simply because they use many orders of magnitude more steel than the amusement industry.

 

[Hixee]

I know little about steel manufacturing, not fallen under my radar for many years. That said, I can talk in high-level general terms about these things based on what I recall from my studies.

The thing to remember is that likely a lot of the 'cost' of manufacture can loosely be grouped as overheads. It's shipping costs from mine to factory, power for the factory, shipping costs from factory to supplier, etc. Given the prevalence of raw materials in China (compared to, say, the UK), the relatively low utility costs, not to mention any government subsidies available to continue to drive the insane growth, means that the overhead costs are likely so much lower that they can afford to undercut the 'Western' prices. Economies of scale and lack of climate tariffs may also be a contributing factor.

Regarding COVID-19, I don't think the amusement industry is large enough to exhibit any signs on the manufacturing side of the ripple effects of the virus. I can imagine that companies are able to scramble to acquire any remaining quantities of steel needed, even if by special means, before any effects are felt. I'm sure other industries, like automotive will have to deal with supply chain shortages much more than they currently are simply because they use many orders of magnitude more steel than the amusement industry.

Yeah. Every manufacturer in the world could cancel every project for the next decade and the 'steel industry' wouldn't even notice. Individual factories, maybe, but the industry as a whole? Forget it.

 

[Hixee]

Oh, and additional thought (double posting to ensure the tag works - never sure when editing).

We should see what @pvnks thinks about this. It's basically his wheelhouse, after all.

 

[Nitefly]

I don’t know much, but I would have thought that the steel is not the most expensive part of buying the ride - that would go towards professional fees, no? Engineers, concept artists, landscaping, design, construction, training, tech specs, insurance surveyors, that sort of thing.

 

[pvnks]

A few questions raised here that I can answer;

1. How do the Chinese produce steel so cheaply?

A: Steel manufacturing is subsidised by the state government / state owned and producers have little pressure put on them to abide by environmental laws that would drive up the cost per ton. America spend 80% more per ton on average to produce steel. I can imagine that European laws being stricter drives that margin even higher, not to mention the inability for governments to subsidise or relax energy costs for businesses due to strict anti-competitive measures enforced by the EU Commission.

Tie that Chinese operating model in with the companies that supply the raw materials to the steel production plants benefitting from the same environmental concessions and subsidies and you've got yourself one hell of a cheap and supremely agile steel sector able to price gouge at will and gobble up market share en masse.

Locally here for us Brits though, Brexit may positively impact steel production in the UK, paving a clear path for government to draw up support and legislation to aide steel production & manufacturing without being at risk of breaching EU competition laws. We are yet to see any such plans thus far...




I'll answer the others when I get a bit of spare work-time!

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