Steelmaking raw material prices hold steady

Table 1 (click to expand) shows the latest prices for each product and their changes from recent months.

Iron ore

The import price of Chinese iron ore fines (62% Fe, delivered North China) had trended lower across the first half of the year, reaching an eight-month low of $94 per dry metric ton (dmt) in June. Prices ticked higher in July, rising to a four-month high of $103/dmt by the end of the month and hovering there since. The latest price as of Aug. 25 is $102/dmt, down 1% m/m (Figure 1). Iron ore is 5% more expensive than it was three months ago and 3% higher than this time last year.

Coking coal

Premium hard coking coal prices have overall trended downward since mid-2023, recently reaching a near four-year low of $168/dmt in March. Prices have bobbed in a relatively narrow range over the past year, currently up 6% m/m to $188/dmt as of Aug. 25 (Figure 2). Coking coal is 3% less expensive than it was three months ago and 5% cheaper than August 2024 levels.

Pig iron

After falling to a four-year low of $415/dmt earlier this year, Brazilian pig iron prices briefly rebounded in March through May. In July, we saw prices tumble back down to $416/dmt and they have remained there since (Figure 3).  Pig iron is 10% cheaper than it was both three months ago and one year prior.

Note that this report uses Brazilian pig iron prices, now the main source of US imports rather than Russia and Ukraine, averaging prices from the country’s northern and southern ports.

Scrap

Steel scrap prices held steady in August for the third consecutive month after falling in April and May. SMU’s average August scrap prices were $380 per gross ton (gt) for shredded and $425/gt for busheling (Figure 4). Busheling scrap is 8% higher than it was this time last year, while shredded scrap is 1% lower.

Fluctuations in scrap and iron ore prices provide insight into the competitiveness of integrated (blast furnace) mills, whose primary feedstock is iron ore, vs. mini-mills (electric-arc furnace), whose primary feedstock is scrap. To compare these two mill materials, SMU divides the shredded scrap price by the iron ore price to calculate a ratio. A higher ratio favors integrated mills, a lower ratio favors mini-mill producers (Figure 5).

Across the past three years, integrated mills generally held the cost advantage up until the middle of 2023, then it shifted to mini-mill producers through early 2024. In late 2024, we saw favor shift back to integrated mills, an advantage they held through the first few months of this year. Since peaking in March at 4.50, the ratio has trended lower since, standing at a neutral 3.73 as of Aug. 25.

Zinc and aluminum

Zinc and aluminum are used in some coated steel products. Fluctuations in spot prices can prompt steel mills to adjust their galvanized and Galvalume coating extras.

After falling sharply in late March, zinc prices have recovered across the last five months, climbing as high as $1.29/lb in July. The latest weekly LME zinc cash price as of Aug. 25 is $1.26/lb, up 4% compared to prices three months ago, but 2% less than those seen this time last year (Figure 6).

Aluminum spot price movements have mostly mirrored those of zinc since February. However, the Midwest Premium (MWP) has surged in recent months. The latest weekly LME cash price is $1.19/lb as of Aug. 25, up 1% m/m and up 6% from both three months ago and one year ago. The weekly average aluminum MWP is up to $0.71/lb as of Aug. 25, just one cent lower than the record high $0.72/lb seen in the first week of August.

The MWP has increased 87% over the past three months and is up 284% from this time last year. The all-in Midwest aluminum price is now $1.90/lb, the highest it has been in almost three and a half years (Figures 6 and 7).