Supply & Demand - Scrap Steel

Link: http://www.manufacturing.net/article/CA6389781.html

There is a very high demand for scrap steel these days. China, India and many developing countries are demanding for more scrap steel and the supply just isn't enough. It is estimated that if all technological scrap steel were to be recuperated, the domestic supply will still be too low to meet the demands. In Europe, the crude steel production has increased to 4 percent over the past year but in the scrap steel market, it has increased to 5 percent. People in Turkey expects that the prices of scrap steel will probably increase in December and definitely increase in January when consumers replenish for the winter. The lack of supply of scrap steel worldwide is said to cause domestic collection volumes to fall.

There are many factors that will affect the demand such as the price, tastes and preferences, future expectations and many more. In the case of the scrap steel market, the main reason that demand is increasing is because of the 'Number and characteristics of the Buyers'. This means that as the population increases, the demand for most products increase as well. A demand curve on a graph is shown by the inverse relationship between price and quantity demanded, it is a downward- sloping curve. When the price of an item goes up, the quantity demanded goes down.

In a market such as the scrap steel market, supply is hard to reproduce. Steel is a mineral and it's a non-renewable resource. Once it's used it, it's gone forever. For it to have a high supply, it would only happen if the demand for it wasn't so high. Scrap steel is in demand all over the world, it is used for many things after it's melted. It is used in buildings, automobile parts, roads and much more. If I invested in a scrap steel market, I think that the chances of the price increasing would be very high, since it is in demand worldwide.