Steel costs drive up Volvo's prices

The rise is in response to the "record global demand for commodities", said the company in a statement, which has led to "sharp increases in the cost base of heavy equipment manufacturers."

Restricted supply and burgeoning demand for steel, especially in China, said the statement, has lead to the cost of iron ore rising by "over +70%" on the worldwide markets. This has resulted in a sharp increase in the price of steel and consequently in the production costs of manufacturers of construction equipment.

Quoting Scott Hall, executive vice president of Volvo CE, the statement said, "Manufacturers of heavy construction equipment are being particularly hard hit by the current record prices of commodities, such as steel, oil, iron ore and rubber. With no sign of commodity prices cooling in the foreseeable future it has become unavoidable that these costs be offset in the form of a price increase."

The price increase will be made across Volvo CE's entire product range and implemented globally in phases, said a spokesman.