One can’t write a best of series without paying special attention to steel and steel prices. This summer has proved to be a blockbuster when it comes to the subject of iron ore price negotiations. Today, iron ore prices make up about 27% of the costs to produce one ton of steel (assuming we are discussing integrated steel making of course). So all of these stories about Rio Tinto executives in China jailed, or China not paying a lower iron ore price than Korea or Japan grab quite a bit of attention.
Here is a look back at a couple of those posts:
- China Buying Iron Ore at Japanese and Korean Prices
- What do Rising Iron Ore Prices Tell Us About Steel Prices?
At the same time, our own MetalMiner IndX(SM), available free of charge to MetalMiner readers has shown significant price increases in Chinese steel pricesÃ‚Â (since April of this year) and continues to do so. And even if you buy your steel in the US, the China price is relevant for a couple of reasons. First, many believe that any pick-up in demand from China bodes well for global growth. Price increases in China have often led to wider price increases for other metals elsewhere as dollars pour into ETF’s and other commodities.Ã‚Â And that point brings us to the nextÃ‚Â ” the domestic mills have also raised their prices (yet they are not operating at anywhere near the capacity levels of their counterparts in China). The big question, will prices stick remains to be seen. Here are a couple of recent posts on that topic:
Finally, we ask the question, does history repeat itself? We say yes, check out this analysis of some articles written in the Wall Street Journal in 1960: