Increases in key steelmaking raw materials prices and mounting energy costs are pushing global steel prices up, even as downstream consumption in several markets remains largely subdued.
Ongoing geopolitical disruptions in the Middle East and the Black Sea are resulting in bottlenecks across a variety of different commodities, including steel and raw materials.
Escalating tensions between the US and Iran in the Middle East continue to threaten LNG transit via the strait of Hormuz, which coupled with depleted European gas inventories is pushing prices up. European natural gas prices have risen to highs not seen since the 2022 energy crisis, with the Argus TTF front-month price natural gas price at €79.6950/MWh on Wednesday — the highest since December 2022. The price has averaged €47.6818/MWh so far this year.
Rising energy costs are affecting European steel mill margins, particularly in long steel markets, where low demand is outweighing cost pressures in some regions such as Germany, and in others like Italy, prices are already moving up.
At the same time, volatility in steelmaking raw materials has compounded margin pressures for blast furnace-based producers globally, with coking coal in particular facing sustained supply tightness. Mining inspections across China following domestic incidents have curtailed local production for much of this year, leaving buyers in China more reliant on Russian and Mongolian supply.
Supply from these alternate sources was subsequently choked by regional diesel shortages and drone attacks targeting Russian ports, which forced producers to reroute rail and maritime shipments over longer, more expensive transit routes.
The Argus-assessed Australian premium low-volatile hard coking coal price today was at $284.30/t fob Australia, a €67.95/t increase since 7 August, or up by more than 30pc.
The Argus fob Tianjin HRC index has increased by $22/t to $501/t between 7 August and today. The fob India HRC assessment is up by $35/t from 7 August to 4 September and the northwest EU HRC index has risen by €19.25/t to €736/t from 7 August to 9 September.
