Supply_And_Demand_-_Automotive_Supply_And_Steel

Supply And Demand - Automotive Supply And Steel The effects of supply and demand are clearly demonstrated in the automotive parts supply industry. Due to the increased consumption of new and scrap steel in China, a relatively new world manufacturing market, the supply of steel for the rest of the world has decreased. This additional and dramatic increase in consumption of a good causes a demand shift in the demand curve or in this case an increase in demand. Billions of dollars are being invested in China every year and these new ventures need steel for buildings, machinery and raw materials. Most of the scrap steel that was available in the under developed country has already been used and now they are looking to other countries for their scrap steel. This competition for a finite amount of product is driving up the price. “The price run-up is generally blamed on a shortage of scrap steel caused by China’s booming industrial sector. The increases are due to steel distributor surcharges that have ballooned from $20-$60 per ton to $80-$130 per ton” (Hampton, 2004, March 4). Because of the dramatic price increases automotive parts suppliers are trying to pass the increased costs on to their steel, suppliers, price, increases, demand, prices, hampton, costs, automotive, 2004, supply, scrap, new, due, customers, per, pass, parts, must, march, help, between, world, until, trying, ton, tiers, situation, side, recovery, raw, out, one, negotiations, materials