CRU: Raw Materials Prices Continue to Decline

By CRU Senior Analyst Erik Hedborg, from CRU’s Steelmaking Raw Materials Monitor

Throughout 2019, steelmakers’ willingness to pay higher prices for premium quality steelmaking raw materials has diminished. For iron ore, the spread between 65% and 62% Fe fines has fallen to $8 /t in Q4, well below the $28 /t peak in 2018 Q3. The quality premium for coking coal has also declined, although to a lesser extent. Premium hard coking coal (HCC) is currently trading at $12 /t above the standard HCC price. Although this is the lowest level in years, recent price falls across all coking coal products mean the relative premium, expressed in percent above the standard price rather than U.S. dollar spreads, has been relatively steady. In fact, the relative premium for higher quality coking coal is at similar levels to those in mid-2018, a time when steel industry profitability peaked.