Raw Steels MMI: Index increases by double digits as steel prices gain to close 2020

The Raw Steels Monthly Metals Index (MMI) increased by 16.5% this month, as steel prices showed strength in December.
January 2021 Raw Steels MMI chart

U.S. steel events

The American Iron and Steel Institute, the Steel Manufacturers Association, the United Steelworkers union, the Committee on Pipe and Tube Imports and the American Institute of Steel Construction sent a letter to Joe Biden urging him to keep the 25% national security tariffs on steel imports that were imposed in 2018.
The industry groups emphasized that the tariffs are essential “to ensure the viability of the domestic steel industry in the face of this massive and growing excess steel capacity.”
“Removing or weakening of these measures before major steel producing countries eliminate their overcapacity — and the subsidies and other trade-distorting policies that have fueled the steel crisis — will only invite a new surge in imports with devastating effects to domestic steel producers and their workers,” the letter continued.
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Iron ore supply

Iron ore availability has recently faced constraints. Australia, one of the largest iron ore producers, had to close some of its ports due to the cyclone season.
Despite the weather-related shutdown in Australia and the trade disputes between China and Australia, China imported 40.0 million tons of iron ore in November. Meanwhile, China imported 34.4 million tons the previous month.
To secure iron ore supply and pricing power, the Ministry of Industry and Information Technology (MIIT) of China announced its intention to build one or two iron ore mines overseas by 2025.
Currently, China relies on imports for 80% of its iron ore requirements.

Positive outlook on Asian steel

The China Metallurgical Industry Planning and Research Institute (MPI) reported China may have produced 1.05 billion tons of crude steel throughout 2020. The figure represents a 5.4% increase from the previous year. Furthermore, the Institute expects Chinese output to increase during 2021 to approximately 1.065 billion tons.
This output increase is the consequence of rapid economic growth that is boosting the construction, machinery and energy sectors.
Meanwhile, Japan’s largest electric-arc furnace (EAF) steelmaker, Tokyo Steel Manufacturing, raised its prices this month by 11-16%, as demand remains strong. Local inventories continue to decline. Furthermore, the cost of raw materials continues to increase.
Other Asian rivals, such as South Korea’s Posco and Hyundai Steel, and China’s Baoshan Iron & Steel will watch Tokyo Steel’s pricing when considering theirs.

Actual metals prices and trends

The Chinese slab price rose 12.4% month over month to $663.95/mt as of Jan. 1. Meanwhile, the Chinese billet price rose 1.9% to $546.33/mt.
In addition, Chinese coking coal increased 12.7% to $434.04/mt.
Meanwhile, in U.S. steel prices, U.S. three-month HRC rose 20.4% to $962/st. U.S. shredded scrap steel spiked this month by 38.3% to $401/st.
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