Iron Ore Oversupply Ensures Another Flat Week for Steel Prices

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All of those expansion projects in Australia, Africa and elsewhere undertaken by BHP Billiton, Rio Tinto and others have officially glutted the market; coupled with China taking a break in demand, that means lower prices.

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The combination of supply surge and slowing demand growth has unleashed a battle for survival among iron ore producers and that’s bringing down steel prices as well.

US steel producers got some bad news in the form of an essentially free pass for Turkish producers to import lower-cost rebar, after a decision this week from the Department of Commerce. An odd feature of the decision is that Turkey escaped with only 1.25 percent import duties while NAFTA signatory Mexico saw its producers slapped with duties of at least 22 percent.

The biggest mover this week was the US HRC futures contract spot price with a 0.5 percent fall on the weekly Raw Steels MMI® to close the week at $657.00 per short ton. The price of US shredded scrap increased by a slight 0.3 percent over the past week to $382.00 per short ton. The 3-month price of the US HRC futures contract remained steady from the previous week at $645.00 per short ton.

Korean steel scrap finished as the week’s biggest mover on the weekly Raw Steels MMI® after dropping 4.0 percent and landing at KRW 240,000 ($234.27) per metric ton. Korean pig iron prices held steady from the previous week at KRW 635,000 ($619.69) per metric ton.

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Chinese steel prices were flat for the week. The price of iron ore 58% fines from India hit a high price of CNY 840.00 ($136.78) and a low price of CNY 830.00 ($135.15) per dry metric ton. Chinese HRC remained essentially flat from the previous week at CNY 3,380 ($550.37) per metric ton. At CNY 1,390 ($226.33) per metric ton, the price of Chinese coking coal did not change since the previous week. Chinese slab traded sideways last week, hovering around CNY 3,480 ($566.65) per metric ton.

Following a steady week, prices for on the LME the 3-month price of steel billet closed flat at $455.00 per metric ton. At $450.00 per metric ton, the steel billet cash price remained essentially flat on the LME.

With a 0.5 percent decrease, the spot price of the US HRC futures contract closed the week at $657.00 per short ton. US shredded scrap saw its price rise 0.3 percent over the past week to $382.00 per short ton. Closing at $645.00 per short ton, the 3-month price of the US HRC futures contract remained unchanged for the week.

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. 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.

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