Final Thoughts
Final Thoughts
Written by John Packard
September 12, 2014
With iron ore approaching $80 per dry metric ton for spot 62% Fe fines in China (according to our Asian iron ore trading source as well as The Steel Index), I asked John Eckstein, retired metallurgist last with Severstal Sparrows Point and one of our Steel 101 instructors, to comment on the changes the price of iron ore has made to produce a slab and hot band. We compared ore at $120/dmt versus ore going to $80/dmt and he came up with the following:
At $120/dmt the cost of the slab is $505 per net ton and the hot band is $535 per net ton.
At $80/dmt the cost of the slab is $451 per net ton and the hot band is $481 per net ton.
If you want to learn more about the steelmaking process (including how commodity prices affect cost and how it is bought and sold) we still have a few seats left at our next (and last one during 2014) Steel 101: Introduction to Steelmaking & Market Fundamentals workshop. The workshop will be held on October 7 & 8, 2014 in Fort Wayne, Indiana and will include a tour of the Steel Dynamics flat rolled steel mill. Cost for the workshop is $2000 per person with discounts of $100 for SMU member companies and another $100 per person for those companies sending more than one person. Details and registration are on our website or you can contact our office at 800-432-3475 (info@SteelMarketUpdate.com).
This should be a very interesting week (or weeks) as AK Steel and Steel Dynamics close on the assets of Severstal North America and absorb their order books into their company. As mentioned in our first article, we do not know how the new management will handle the commercial people other than the moves that were already made at Dearborn. We assume that each company will notify the customer base of each plant what they can expect and who will handle their accounts after they close on the facilities.
From here we wish everyone well and the best of luck.
From our perspective the real story in the coming months will be how will consolidation affect steel supply and pricing?
We would appreciate any comments that you would like to make on the subject. Please send them to me directly at: John@SteelMarketUpdate.com
As always your business is truly appreciated by all of us here at Steel Market Update.
John Packard, Publisher
John Packard
Read more from John PackardLatest in Final Thoughts
Final Thoughts
SMU uses ferrous scrap survey data to take AI out on a test drive.
Final Thoughts
Will a US-UK meeting next week prove a harbinger of tariff deals to come, or will it be just another case of having the rug pulled from under us?
Final Thoughts
When will we see prime scrap become scarce as the worldwide transition to EAF melting increases, especially for HRC production? It's a question I've been asked a lot.
Final Thoughts: The hidden cost of analysis paralysis in the age of uncertainty
With US economic indicators all over the map, it’s no wonder the steel market has experienced a whole lot of analysis paralysis this year.
Final Thoughts
A recurring theme in conversations with some of you and in the comments submitted in our surveys is concerns about demand and uncertainty around tariffs. Where does SMU’s latest opinion polling on President Trump’s tariffs stand? Let’s take a look at the numbers.