Steel accounts for about 0.3% of the PPI in the USA and, we estimate, about 5-6% in China. Overall, we guess that it amounts to about 1% of the global PPI (if there were to be such a thing); hence, if steel prices rise by 40%, the impact on global inflation rate is 0.4%.

In comparison, we estimate that the price of oil and related prodcuts may account about 9% of the global PPI index. Yet, in the past few years, surging oil prices have not let to major inflation pressures in most countries, unlike the case starting in 1973 ( after President Nixon devaluated the U.S. dollar in August 1971 and oil prices rose sharply in 1973-74)

We don’t see much any inflation in steelmakers’ raw material prices, or in steel products on the world market , after this summer since it appers the prices of steelmakers’ raw materials have risen to unsustainably high levels. Already, for example, freight rates somewhat lower than before ( although rallying on the present time).

We hope that the dis-inflationary powers of the Information Revolution are so potent that steel price increases are just a blip. For sure, at this moment in time, declining interest rates in a number of Advanced Countries is a signal that inflation is not a near-term problem.