It is generally said that steel is a commodity good. As such, commodities are usually undifferentiated standard products – with much game in the global supply chain. Therefore, the question stands: as a steel dealers in Chennai, is it tolerable to change one’s product mix in order to gain more earnings?
The Value Chain
The answer is a resounding yes. Steel itself consists of many various products. It includes slab and billet (which are commonly assigned to as semi-finished products). But downstream of slab and billet, we also have products that are much larger in terms of price:
in flat products, in developing the order of value – steel chequered plates and zinc coated sheet, hot-rolled coil and sheet, cold-rolled steel, and painted steel – which is normally hot-dip galvanized steel which is then wrapped in a plastic coating for extra anti-corrosion protection in long products, in improving the order of value – heavy sections and rail, hot rolled bar and light parts (including merchant bar), wire rod and drawn wire in tubular products, in increasing order of value – both seamless and joined tube – which when threaded or coated often also have the much higher value.
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The extra way of adding value as a steel manufacturer who used to determine the ms plate price in Chennai would perform more complex grades of steel. Rather than obtaining plain carbon standards, some steelmakers also provide a range of alloy steels. Increasing of one or more alloying components during steelmaking improve the characteristics of the steel, with the most typical alloying elements being manganese, chrome, molybdenum, and nickel. Stainless steel is an alloy of carbon and iron that has the least chromium content of around 10.5 percent. Next high-value group of steels is tool steel which have high resistance to abrasion and as the name implies these steels are uniquely well suited to the manufacture of tools
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Of course,steal dealers used to lead from a production of basic steels to higher value steel results, so the total volume of interest for these steels in most markets fails. For example, stainless steel demand volume is commonly around 2% of demand capacity for carbon steel. On the other hand, the amount per tonne of higher-value steels can be 5 or 10 times greater than the rate of carbon steel. An important matter also is that transport costs become less important when you make practice steels. That is, whilst a transport cost of $25 / tonne is apparently quite significant in the context of a steel sold for $500 / tonne, that cost is of course far less necessary when the steel is sold for $5000 / tonne. The bottom line here is that whilst commodity steels can effectively be sold across a distance of up to a few hundred miles (at most), alloy and other special steels (e.g. stainless) can frequently be exported everywhere in the world.