Steelmaking raw material prices stable to higher

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

Iron ore

Chinese iron ore fines (62% Fe, delivered North China) have rebounded following the eight-month low of $94 per dry metric ton (dmt) seen in June. As of Sept. 22, prices are up to a seven-month high of $106/dmt (Figure 1). Iron ore has increased 4% in the past month, 13% from three months ago, and 15% from this time last year.

Coking coal

Premium hard coking coal has traded in a relatively narrow range since the start of the year, touching a near four-year low of $168/dmt in March. As of Sept. 22, prices are up to $189/dmt (Figure 2). Coking coal prices are 7% higher than levels seen three months ago and 2% more expensive than September 2024 prices.

Pig iron

Brazilian pig iron prices have been flat over the past four months at $416/dmt. Recall that after falling to a four-year low of $415/dmt at the beginning of the year, prices briefly rebounded in March through May, then slipped again in June (Figure 3). Pig iron is 10% cheaper than it was one year ago.

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

After three months of stability, select steel scrap prices saw movement in September. SMU’s September shredded scrap index held steady at $380 per gross ton (gt) for the fourth consecutive month. Our busheling index fell $20/gt from August to $405/gt, 5% lower than prices seen three months prior (Figure 4). Busheling is 3% more expensive than it was this time last year, while shredded is 1% higher. The latest outlook for scrap prices in October remains mixed.

Fluctuations in scrap and iron ore prices provide insight into the competitiveness of integrated (blast furnace) mills, whose primary feedstock is iron ore, versus 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).

Integrated mills had generally held the cost advantage from early 2022 through the middle of 2023, then it briefly shifted to mini-mill producers through early 2024. In late 2024 we saw the advantage shift back towards integrated mills, power they held through the first few months of this year. Since peaking in March at 4.50, the ratio has trended back lower, now standing at a neutral 3.58 as of Sept. 22.

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, as we recently saw with U.S. Steel and Wheeling-Nippon.

Zinc prices have climbed steadily since their sharp drop in late March, climbing to $1.35/lb last week. The latest weekly LME zinc cash price as of Sept. 22 is $1.33/lb, up 9% from three months prior, but 1% below this time last year (Figure 6).

Aluminum spot prices movements have mostly mirrored zinc this year, however the aluminum Midwest Premium (MWP) has surged since February. The latest weekly LME cash price is $1.20/lb as of Sept. 22, having risen 1% in the past month, 3% in three months, and 4% year over year. The weekly average aluminum MWP reached $0.75/lb as of Sept. 25, having surpassed the previous record high ($0.72/lb) at the beginning of the month. The MWP has increased 35% over the past three months and is up 313% from this time last year. The all-in Midwest aluminum price now totals $1.94/lb, one of the highest rates seen over the past four years (Figures 6 and 7).