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
Liberty units to be repaid in Speciality restructuring
Liberty units to be repaid in Speciality restructuring
London, 29 November (Argus) — GFG Alliance entities Marble Power and Liberty Fe Trade DMCC will be excluded from Liberty Speciality Steel's restructuring plan, meaning they will be repaid, according to documents seen by Argus . GFG Alliance is the overall parent of Liberty Steel and all its subsidiaries. Speciality Steel owes and will pay Marble Power, its power supplier, around £11.5mn. Liberty Fe Trade is owed £1.4mn for the procurement of software licences, and will not have sufficient reserves to cover those licences without being paid. Liberty declined to comment. In total, GFG Alliance entities are owed over £288mn by Speciality Steel, but aside from Marble Power and Liberty Fe Trade, those claims will be released, reflecting a "significant contribution" from the wider parent, according to the restructuring documentation. In the event that Speciality Steel creditors accept its restructuring, enabling the company to keep operating, it will reduce its higher-margin aerospace work "as it is unable to retain quantities produced during the last two years for its largest two customers beyond the first half of 2025", Liberty's business plan states. Two main aerospace customers are supporting the business through upfront payments and premiums for accelerate deliveries, but this arrangement will end by May 2025, after which aerospace work will be significantly reduced. Key customers will provide £27.5mn in cash support to January 2025. As the aerospace work winds down, the company will "hire out the excess capacity to another steel producer", and discussions about this are continuing. Market sources have said Speciality could produce billet for British Steel's rolling operations. Going forward, Speciality will focus on vacuum-induction melting at Stocksbridge for other industries, such as oil and gas, and industrial engineering. Speciality will also source steel — including semi-finished products — externally to "increase deliverability of customer products". The business plan envisages the ebitda margin increasing from minus 188pc in February-March 2025 to 2pc in 2026. The plan assumes steady production through the year, other than seasonally reduced capacity in December and August. This would be a big change from this year, with just 50,000t of steel emerging from the electric arc furnace, which has a capacity closer to 1mn t/yr. By Colin Richardson Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US import tariffs would lift steel, scrap costs
US import tariffs would lift steel, scrap costs
Pittsburgh, 27 November (Argus) — President-elect Donald Trump's plans to introduce a 25pc tariff on all imports from Mexico and Canada could increase costs for US steelmakers and manufacturers, but so far lacks clarity on its application around existing steel tariffs and trade agreements. Trump pledged on social media earlier this week to use an executive order to implement a widespread tariff on imports from both countries on 20 January, along with an additional 10pc tariff on all imports from China. The import tax on Canada and Mexico could have sweeping ramifications on the steel and manufacturing industries across the three North American countries. The additional import tax on China, which could lift current tariffs to as high as 60pc for all steel imports, would likely have minimal effects on US steel and scrap markets because of already-low import volumes from the nation. Despite the potential havoc the tariffs could have on supply chains, many market participants are waiting to react until more details about the plan are formalized. Some market participants expect that the list will be refined, and others view the pledge as a negotiating strategy for broader trade agreements, but some US scrap importers are beginning to lightly sketch out what the tariff would mean for sourcing raw materials. Lacking clarity Trump's announcement did not specify how the proposed import tax would interact with the existing Section 232 tariffs on steel and aluminum, which were imposed by his first administration in 2018 under national security concerns. Canada, Mexico and a few other key countries have remained exempt from the Section 232 tariffs, while other countries have seen tariffs removed and a non-tariffed quota system imposed. Similarly, if the US implemented tariffs on imports from Canada and Mexico it would be in violation of the US-Mexico-Canada Agreement (USMCA) that was also put in place by Trump's first administration in 2020. The proposed tariffs would equate to $2.1bn in additional costs for volumes of steel products imported this year, based on the latest preliminary data from the US Department of Commerce, and analysis of Canada and Mexico volumes. Canada and Mexico have exported 6.87mn metric tonnes (t) of steel products for consumption to the US with a value of $8.25bn year to date October, down from the 7.8mn t of products with a $9.65bn value imported the same period a year earlier, according to the latest available preliminary data from the US Department of Commerce. Scrap impact The import tax could have a significant impact on some US steelmakers' raw material pricing and sourcing strategies because Canada and Mexico are the two largest shippers of ferrous scrap into the country. The US has imported about 5mn t/yr of ferrous scrap over the last three years and ferrous scrap import volumes year to date September have so far totaled 3.5mn t, down 8pc from the same period last year. Canada has shipped 75pc of all ferrous scrap exports into the US, including stainless scrap and alloy scrap, over the last 10 years, while Mexico has shipped 12pc of the total over the same period. US steelmakers in the upper Midwest and Detroit region would be particularly impacted by the import tax because of the volume of prime and shred sourced from Canada. The US has imported a monthly average of 60,000t of #1 bundles and 44,000t of shred from the country since 2013. One US steelmaker said prime grades could see the greatest disruption because they are traded through longer-term, index-based contracts which might not have provisions regarding boarder tax changes because of assurances under the USMCA. Some Canadian traders said that if the tariff went into effect, the costs would be passed through to US steelmakers which would likely prompt them to cut back on volumes. This would increase regional demand for scrap in the US and could support a shift in flows from the east coast inland. Meanwhile, the timing of the US domestic ferrous scrap trade and the potential implementation of the import tax could also create challenges for some mills in January. One US steelmaker said that it would initially try to split the costs with Canadian dealers in January but work to establish a more formal agreement for the remainder of 2025 if the tariff were implemented. By Brad MacAulay and Rye Druzchetta Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Australia's BOM forecasts severe cyclone season
Australia's BOM forecasts severe cyclone season
Sydney, 27 November (Argus) — Australia's Bureau of Meteorology (BOM) expects the country to experience 11 tropical storms over the next few months, threatening the country's mineral-rich Pilbara region and coal infrastructure in Queensland. The number of storms is in line with historical averages, but BOM warns that rising ocean temperatures could increase their severity. The state weather agency believes that four of these storms will make landfall from late December, and that a La Nina event could start later this year, although it may not last very long. La Nina events are associated with high levels of cyclonic activity. BOM's forecasts suggest that five of the storms are likely to form around Western Australia's mineral-rich Pilbara region, which houses more than 40 operating iron ore mines and two lithium mines. Over the last three months, sea surface temperatures around Pilbara have exceeded historical averages by 1.2–2°C, warming more than in any of the country's other cyclone-prone regions. On the other side of the country, four tropical storms could form around Queensland's cattle and coking coal producing regions, although these are likely to be less severe than the Pilbara storms. Temperatures across most of Queensland are forecast to exceed historical averages by 0.4–1.2°C in October-December. Cyclonic weather in Pilbara could disrupt iron shipping and mining activity in the region. Australia's three largest iron export ports sit along the region's coast. In 2019, Cyclone Veronica forced the closure of Pilbara's three major ports and multiple mines operated by mining company Rio Tinto, prompting the firm to cut its production forecasts for the year. Harsh storms in Queensland have previously damaged vital coal transport links in the state, hampering exports. In 2017, Cyclone Debbie damaged rail lines linking coal mines to the ports of Gladstone, Hay Point, Dalrymple Bay, and Abbott Point, which handle most of the state's coking coal exports. More recently, severe weather also halted deliveries to Mackay port . Queensland and Pilbara are also home to major LNG terminals at Dampier and Gladstone ports that sit within cyclone-prone zones. The two terminals together export over 3mn t/month of LNG . By Avinash Govind Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Q&A: Boston Metal Brazil’s sales to start in early 2025
Q&A: Boston Metal Brazil’s sales to start in early 2025
Sao Paulo, 26 November (Argus) — Metals technology company Boston Metal expects to start commercialisation in Brazil in early 2025. The company, which has developed molten oxide electrolysis (MOE) technology to improve metals extractions, initially will focus on extracting so-called "high-value" metals from tin slags at its plant in Minas Gerais state. The move is part of the company's effort to offer greener metals to the market and comes at the time when the company is developing MOE technology in the US to produce green steel. Metals reporter Carolina Pulice talked with Boston Metal's Brazil commercial director Gustavo Macedo about MOE technology and the company's plans for the future. The interview has been translated from Portuguese. Can you explain what MOE technology is? MOE technology was developed at the Massachusetts Institute of Technology in the 1980s. It uses the electrolysis process on metals, a process that has been known for a long time. What is different about MOE is that its platform can be used to separate an infinite number of metals. Our company started to use MOE technology in iron ore to make it greener. After it has gone through the electrolysis process, iron is practically pure and releases only oxygen and then [you have] green steel. The great advantage of this process on iron ore is that you can use the metal with any grade, different from the hydrogen route that demands high contents of iron ore. And what will the operation in Brazil be like? Our focus in Brazil is to extract three metals from local tin slags — tantalum, niobium and tin — from our plant in Minas Gerais state. It is a rich region and has plenty of cassiterite, with a lot of mining waste available. At our new plant in Minas Gerais, we will start producing ferro-tin and a ferro-tantalum niobium alloy. We are already operating our pilot and demonstration plants. We plan the first commercialisation at the beginning of 2025. Our main market is likely to be China, where we will export our material to be used in the electronics industry. The move comes at a time when more consumers are demanding greener supply chains. And this is an advantage for us because Minas Gerais state can already secure 100pc renewable electric energy. The global tantalum chain is very complex because more than half of this metal comes from conflict regions in Africa. Can you tell us a bit more about Boston Metal's operations in the US? Our goal there is to develop MOE technology for the production of green steel. Steelmakers would add this process to their operations by replacing their blast furnaces with MOE technology, allowing them to produce pure iron by utilising electricity instead of coking coal. Our headquarters in the US is already at the stage where they are building our first demonstration plant. MOE technology at present demands 4MWh of energy per tonne of steel. Electric arc furnaces that process scrap currently have consumption of 0.5-0.8MWh/t. By Carolina Pulice Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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Insight papers - 20/05/24Moving target: Using an index to track volatile steel prices
Flat steel prices have experienced unprecedented volatility since 2020. Against this backdrop, an increasing number of buyers have started to link their purchasing to price indexes.
Insight papers - 16/05/24Argus launches six new HRC cif Italy origin differentials
The market for importing hot-rolled coil (HRC) to the EU is being driven by a growing number of external factors that are widening differentials for prices from various origins, creating the need for new price assessments that improve transparency for an increasingly complex market.
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.
