Page 47 from: June / July 2008

47June/July 2008
Ferrous
each year, announced in April that it
would increase its June delivery prices
by U$ 180 per tonne but upped the
figure last month to US$ 270 per tonne
effective June 1. For July, an increase in
its spot sales prices of US$ 90 per short
ton has already been announced,
thereby pushing levels above US$ 1100
per short ton or US$ 1200 per metric
tonne. Arcelor-Mittal has taken the very
unusual step of asking its contract cus-
tomers in the EU and the USA to pay a
raw materials surcharge of US$ 250
per tonne with effect from July 1.
Southern European prices for discrete
plate has jumped to over US$ 1275
per tonne, with lead times having
extended from 7 to 8.5 weeks.
The earthquake in China has idled
three steel mills to date and endan-
gered production of the long construc-
tion steel required in large volumes to
rebuild the 3.5 million-plus houses
and other buildings destroyed in and
around Sichuan province. Many trans-
port lines have been blocked or cut by
Also in mid-May, Brazilian pig iron was
sold for US$ 810 per tonne cfr New
Orleans – or US$ 100 more than at the
end of April. But lower volumes of Bra-
zilian pig are being exported at pres-
ent owing to climatic reasons follow-
ing a shortage of charcoal and to
higher domestic demand. The country’s
exports of iron ore have also declined:
in the first four months of 2008, Brazil
exported 80 million tonnes, of which
30 million tonnes went to China, 9.5
million to Japan and 6.7 million to
Germany. This total compares to nearly
83 million tonnes in the same period
last year. For shipping from Brazil to
China, the cost of chartering a Cape-
size bulk dry cargo carrier of around
125 000 tonnes is around US$ 100
per tonne, or double that prevailing at
the start of the year and also double
the current cost from Australia to
China. Spot iron ore prices have now
reached US$ 200 per tonne fob.
DRI and HBI prices have increased
more modestly to over US$ 700 per
tonne fob Venezuela for delivery in
September – a level similar to scrap.
The elevated Venezuelan prices are
being attributed to high demand, ever-
rising scrap prices and a shortage of
supply given that only 4.8 million
tonnes of HBI were produced last year.
Some countries are building new pro-
duction facilities: for example, Malay-
sia will almost double its capacity to
approaching 6 million tonnes this year
while Iran will add a further 3.5 million
tonnes of capacity in the 12 months to
March 2009.
Canada’s Elk Valley mining company,
which claims to be the world’s second
largest exporter of sea-borne metallur-
gical coal, has been selling its product
of late at US$ 275 per tonne compared
to US$ 93 in 2007. Chinese production
is currently meeting some 60% of
world demand for coke.
Steel
Steel mills everywhere, whether they
be integrated or electric arc, are com-
plaining of dramatic increases in their
ore, coal and alloy costs as well as of
spiralling energy costs – all of which
currently amount to US$ 300-500 per
tonne of steel produced. Mills with no
fixed annual contract for ore and coal
find themselves towards the top end
of this cost band.
One of the main victims of the steel
price explosion is the automotive
industry whose purchase prices for
cold rolled coil and other qualities
have almost doubled this year. It is
questionable whether they will be
able to pass all of these higher costs
on to their customers.
Rebar prices are also rising by the day.
CIS countries were demanding US$
1130 per tonne fob Black Sea in mid-
May and some mills have even asked
the same price for billet on a cfr Persian
Gulf countries basis – a price some US$
120 higher than the April level. In May,
Turkish mills were offering rebar at
US$ 1400 per tonne fob and billet at
US$ 1200 for third-quarter deliveries to
the Middle East. In Western Europe, the
rebar price has exceeded Euro 800 per
tonne delivered (US$ 1265) with July/
August delivered prices likely to be
above Euro 850 per tonne (US$ 1350).
For June deliveries, CIS slab is being
offered at US$ 1100-1200 per tonne
cfr and billet at more than US$ 1000
fob Black Sea.
Lower steel stocks
Many steel stockholders are complain-
ing that their inventories have dimin-
ished markedly since customers
changed tactics and started ordering
volumes in excess of their current
needs for fear of further price increas-
es. SBB has reported that, globally,
well over 80% of stockholders and
consumers of steel expect higher pric-
es in the next three months.
US stockholders have confirmed that
stocks were 33% lower in May while
the decline in Europe was greater than
40%. Average lead times for rebar
lengthened from four to six weeks in
April. Nucor in the USA, which produc-
es some 24 million tonnes of EAF steel
C
ru
de
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te
el
p
ro
du
ct
io
n
an
d
fin
is
he
d
st
ee
l u
til
iz
at
io
n
in
m
ill
io
n
t
Quelle: IISI SRO März 2008
Source: WV Stahl
World Steel Demand continues to grow:
Forecast 2008 and 2009
1600
1400
1200
1000
800
600
400
200
0
2004 2005 2006 2007 2008 2009
Crude steel production
1069
976
91
149
61
171
116
35
77
276
1147
1032
95
140
67
164
116
40
78
332
1240
1127
107
156
77
186
116
46
79
361
1414
1282
129
144
94
195
129
55
80
455
1504
1363
139
146
101
200
135
62
80
500
Fi
ni
sh
ed
s
te
el
u
til
iz
at
io
n
Others
NAFTA
Cis/other Europe
EU 27
Other Asia
India
Japan
China
1343
1202
119
141
87
192
123
51
80
408
Price Development of Iron Ore and Coal
Source: WV Stahl
150
125
100
75
50
25
0
350
300
250
200
150
100
50
0
2002 2003 2004 2005 2006 2007 2008 2002 2003 2004 2005 2006 2007 2008
U
S-
$-
ct
s/
FE
-U
ni
t
U
S-
$/
t Factor 3
within 5 years
+341%
+66%
140.8
300
Coking coal (fob)Carajas-Fine ore (fob)
RI_037 MA-Ferrous.indd 47 20-06-2008 08:49:33