The Steel Price ROCKET SHIP

There has been an unprecedented surge in the steel mills’ costs. We’ve been witness to a) a 65% rise in the price of international iron ore; b) a probable more than doubling of the one-year international coking coal price (given the 150% rise in the spot coking coal price); c) a rise in the Chinese coke export price to above $500 per tonne, FOB the port of export; and d) a further increase in steel scrap prices to new records, with apparently more to come. Chinese, European and Japanese steelmakers’ currencies have been strong, which holds down their rise in material costs in U.S. dollar terms, but at the same time pushes up their overall costs in U.S. dollar terms (since non-raw material costs denominated in the home currency outweigh the cost of purchased raw materials). Overall, for integrated steel companies that purchase most of their raw materials at the international market price, the expected rise in the operating cost this year is more than $150 per tonne.

There have been record steel price increases on a per tonne basis in the spot markets. For example, hot-rolled band on the world export market is now in the range of $870-900 per tonne, with the $900 per tonne figure increasingly common, versus about $550 per tonne at the start of the year.

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