Steel
Overview
The price indices in our Argus Ferrous Markets and Argus Global Steel services are widely used by companies in physical supply contracts around the world – for iron ore, coking coal, hot-rolled coil (HRC) and ferrous scrap.
Many of them are used as the settlement prices for cash-settled futures contracts launched by exchanges to allow users of the derivatives who also transact in the physical market to minimize basis risk while hedging. These cash-settled monthly futures contracts are settled against the arithmetic mean of all the published Argus prices during each calendar month.
Using indices allows companies to trade material on an index-linked basis, not only via fixed-prices sales. This offers significant advantages when prices are volatile, yet the modern finished steel market remains primarily transacted on a fixed price basis. The addition of futures markets offers opportunities to enhance supply chain resilience further.
Latest steel news
VW idles Brazil auto plants as floods hit parts supply
VW idles Brazil auto plants as floods hit parts supply
Sao Paulo, 14 May (Argus) — Persistent heavy rains in Brazil's Rio Grande do Sul led Volkswagen to announce collective vacation for workers in three of its local plants as the automaker struggles with a lack of parts made in the flood-hit state. The Anchieta, Taubate and Sao Carlos facilities, in southeastern Sao Paulo state, will have collective vacation starting 20 May as floods forced auto part suppliers to stop production. "Due to the heavy rains affecting the state and people of Rio Grande do Sul, some Volkswagen do Brasil parts suppliers, with factories installed in the state, are unable to produce at this time," the company said on Tuesday. Volkswagen declined to comment on which auto parts suppliers were affected by the floods. Volkswagen's Sao Jose dos Pinhais facility, in Rio Grande do Sul, will remain operating, the company said. Heavy rains that began flooding Rio Grande do Sul in late April persisted over the weekend , continuing to wreak havoc in the state. Rains reached an accumulated 123mm (4.8in) on 10-12 May in the state capital Porto Alegre, according to Brazil's national meteorological institute Inmet. Some areas experienced around 80mm of rain on 12 May alone, according to the US National Oceanic and Atmospheric Administration. Showers lessened but continued on 13 May, reaching 35mm in some parts of the state. The extreme weather has left 148 dead and 124 missing, according to the civil defense. Over 538,000 people are displaced. By Carolina Pulice Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Anglo American to exit from coal, Ni, platinum: Update
Anglo American to exit from coal, Ni, platinum: Update
Adds details of Anglo American's latest plan to demerge or sell its assets Singapore, 14 May (Argus) — UK-South African mining firm Anglo American has announced plans to exit its coal, platinum, nickel and diamond businesses, shortly after rejecting Australian resources firm BHP's latest takeover bid. Anglo American wants to sell its coking coal business in Australia, which includes the 6.5mn t/yr Moranbah and 5mn t/yr Grosvenor mines in Queensland. The firm also plans to demerge Anglo American Platinum, as well as sell or demerge its De Beers diamond business, it said on 14 May. Anglo American will also slow investment in its Woodsmith polyhalite fertilizer project in the UK, where it was previously targeting first commercial output in 2027 . It is also exploring options for care and maintenance as well as divestment of its nickel assets in Brazil. The move to "accelerate the delivery of consistently stronger shareholder returns" with the latest plan comes on the back of a takeover bid by BHP. Anglo American turned down a revised £34bn ($42.7bn) takeover proposal from BHP on 13 May because it "continues to significantly undervalue Anglo American and its future prospects". It earlier rejected BHP's £31bn all-share offer for the same reason. "The latest proposal from BHP again fails to recognise the value inherent in Anglo American," Anglo American chairman Stuart Chambers said on 13 May. Anglo American shareholders are well positioned to benefit from increasing demand from "future-enabling products", Chambers added. Copper was the second-highest contributor to Anglo American's earnings last year, accounting for 32pc of its earnings before interest, taxes, depreciation and amortisation, after iron ore. BHP's latest offer represents a total value of around £27.53 per Anglo American ordinary share, including £4.86 in Anglo Platinum shares and £3.40 in Kumba shares, BHP said on 13 May. The takeover proposal came with a requirement for Anglo American to complete two separate demergers of its entire shareholdings in Anglo American Platinum and Kumba Iron Ore — its assets in South Africa — to Anglo American shareholders. "This leaves Anglo American, its shareholders and stakeholders disproportionately at risk from the substantial uncertainty and execution risk created by the proposed inter-conditional execution of two demergers and a takeover," Anglo American said. By Reena Nathan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Anglo American rejects BHP’s revised takeover proposal
Anglo American rejects BHP’s revised takeover proposal
Singapore, 14 May (Argus) — UK-South African mining firm Anglo American has rejected a revised £34bn ($42.7bn) takeover proposal from Australian resources firm BHP because it "continues to significantly undervalue Anglo American and its future prospects". Anglo American earlier rejected BHP's £31bn all-share offer for the same reason. "The latest proposal from BHP again fails to recognise the value inherent in Anglo American," Anglo American chairman Stuart Chambers said on 13 May. Anglo American shareholders are well positioned to benefit from increasing demand from "future-enabling products", Chambers added. Copper was the second-highest contributor to Anglo American last year, accounting for 32pc of its earnings before interest, taxes, depreciation and amortisation. BHP's latest offer represents a total value of around £27.53 per Anglo American ordinary share, including £4.86 in Anglo Platinum shares and £3.40 in Kumba shares, BHP said on 13 May. The takeover proposal came with a requirement for Anglo American to complete two separate demergers of its entire shareholdings in Anglo American Platinum and Kumba Iron Ore — its assets in South Africa — to Anglo American shareholders. "This leaves Anglo American, its shareholders and stakeholders disproportionately at risk from the substantial uncertainty and execution risk created by the proposed inter-conditional execution of two demergers and a takeover," Anglo American said. By Reena Nathan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Mexican power outages enter fourth day
Mexican power outages enter fourth day
Mexico City, 10 May (Argus) — Mexican power grid operator Cenace issued its fourth consecutive day of operating alerts amid the heatwave gripping the country. Net electricity demand reached 47,321MW early today, with deployed electricity capacity slightly below at 47,233 MW, according to Cenace. Since 7 May, Cenace has declared emergency operating alerts as demand exceeded generation capacity during peak evening hours, prompting the grid operator to preemptively cut electricity supply across different states to maintain grid integrity. Power outages have lasted up to several hours in Mexico City and in major industrial states as power demand has outstripped supply by up to 1,000MW. Peak demand this week hit 49,000MW, just below last year's historic peak of 53,000MW during atypical temperatures in June. "We are very concerned about the unprecedented outages detected across 21 states, a situation that affects the normal functioning of Mexican companies," national business chamber Coparmex said. Peak electricity demand typically rises in June-July but temperatures this week have risen as high as 48°C (118° F) across some states. Mexico City reported a record high of 34.3°C on 9 May and high temperatures are forecast to continue into next week, Mexico's national weather service said. The inability of Mexico's grid to respond to increased demand is because of insufficient power generation capacity, non-profit think-tank the Mexican institute for competitiveness (Imco) said this week. "Despite the energy ministry's forecast that 22,000MW of new power capacity would enter service by 2026, only 1,483MW had entered service as of 2022" since late 2018, Imco said. President Andres Manuel Lopez Obrador's administration pledged to build new generation capacity, including five gas-fired, combined-cycle plants, but recognized this week that delays had contributed to the power outages. "We have an electricity generation deficit because some of the combined-cycle plants were delayed, but we are working on it and it will soon be resolved," Lopez Obrador said on 9 May. Lopez Obrador's government has also curtailed private sector power development during his administration. Mexico needs to upgrade and expand its transmission network, industry associations say. "In order to resolve this problem, we believe that a reopening of the electricity market to the private sector is imperative," Mexico's wind energy association, Amdee, said. Mexico has 87,130MW of installed capacity, with 39.5pc from combined-cycle gas-fired power plants and 31pc in renewable power, including wind, solar, hydroelectric, geothermal and biomass, according to the latest statistics from the energy ministry. By Rebecca Conan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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Explore our steel products
FOB China HRC
The rise of the Chinese steel market has moved in lock-step with the development of the country’s economy. Crude steel output soared since the start of the millennium and that spurred raging raw material demand, which upended the coking coal and iron ore markets.
By 2012, China had established itself as a source of steel without peer, and while export volumes have moderated since then, China still exerts the dominant influence over Asia’s steel pricing.
In March 2019, the London Metal Exchange (LME) launched a new FOB China HRC futures contract to help market participants to manage their price risk. The contract is settled against the monthly average of the daily price assessments published in our Argus Ferrous Markets and Argus Global Steel services, and it has rapidly established itself as the most successful finished steel futures launch to-date.
European HRC
Current European steel capacity is most densely concentrated in an area encompassing parts of France, Germany and Benelux. While capacity has rationalized, the European industry has proven resilient throughout decades of change and faces the problems of raw material and finished goods price volatility as well as globalized price competition.
Steel prices remain regional by nature and, like Asia, Europe is only beginning to experiment with steel price indexation. To support market participants with their price risk management, CME Group launched a North European HRC futures contract in March 2020. The LME has announced plans to launch their own N. Europe HRC futures contract in late 2020.
Argus has been selected as the provider of choice by both exchanges, and both futures contracts will be settled against the monthly average of the daily Argus price assessments provided in our Argus Ferrous Markets service.
CFR Taiwan Ferrous Scrap
The US East Coast and Europe look to Turkey to set bulk scrap price direction. Conversely, the US West Coast & Japanese supply looks to Taiwan to set container scrap price direction, which sets wider Asian scrap pricing.
Container markets parcel sizes are more liquid and frequently-traded markets, and the LME has launched a new Steel Scrap CFR Taiwan futures contract in July 2021 to support market participants hedge their risk.
Argus has been selected as the provider of choice by both exchanges, and both futures contracts will be settled against the monthly average of the daily Argus price assessments provided in our Argus Ferrous Markets and Argus Global Steel service.