The monthly Raw Steels MMI® registered a value of 87 in August, a decrease of 4.4 percent from 91 in July.
Perhaps no other MMI® index reading this month contained as many conflicting data points as our Raw Steels MMI®.
“Not surprisingly, the Raw Steels MMI® drifted lower on the back of falling US shredded scrap prices,” said Lisa Reisman, executive editor of MetalMiner.
“What does come as a surprise, however — the dichotomy behind surprisingly solid raw material prices within the Chinese market (the largest in the world) for iron ore and coking coal, yet significantly falling China steel slab, billet and hot rolled coil prices,” she continued.
“We believe this reflects poorly on the state of domestic demand in China and the solid raw material numbers reflect the ‘new’ policy of ramping up steel production for export markets that increasingly appears to be unprofitable,” Reisman concluded.
Interestingly, within the US market, we note the larger spread between the US spot HRC contract and the 3-month contract ($606 and $640 per short ton, respectively).
Drivers of the Index Drop
After remaining essentially unchanged the previous month, the price of Chinese slab fell 9.5 percent. After rising 1.6 percent the previous month, Chinese billet prices dropped 8.2 percent as of Aug. 1.
The price of US shredded scrap, meanwhile, fell 9.7 percent.
The price of Korean steel scrap finished the month 3.1 percent lower. This was the second straight month of declines for Korean steel scrap prices. Though the price of Korean pig iron has held steady for the past two weeks, it fell mere cents per metric ton over the past month.
The 3-month price of the US HRC futures contract rose 1.6 percent to $640 per short ton after falling the previous month. Last month was consistent for the cash price of steel billet on the LME, which did not move from $375 per metric ton. The price of Chinese coking coal remained steady over the past month — the second month in a row that price closed flat.
The Raw Steels MMI® collects and weights 13 global steel and raw material price points to provide a unique view into global steel price trends over a 30-day period. For more information on the Raw Steels MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.