Almost all finished steel products are currently priced above US$1,000 per metric ton, ex-works basis. Since November 2007, the world export price for hot-rolled band has risen from about US$600 per metric ton to US$1,024 per metrci ton in May 2008 – an increase of more than US$400 per metric ton, or about 71%. Hence, consumers are asking what would be the justification for this current "steelflation".
For sure, steel producers will be citing the continuous price hikes of raw materials that are affecting global businesses. According to World Cost Curve results conducted by Platts, the average cost to produce hot-rolled band including overhead has risen from US$483 per metric ton in the fourth quarter last year to US$673 per metric ton this year.
For instance, in the U.S. market, a semi-finished slab is not cheap as it is priced at about US$850 per short ton. Its conversion from slab to coil is estimated at US$60 to US$70 per short ton. Tolling fee is about US$100 per short ton. That variables alone, excluding mark-ups, have totaled more than a thousand dollar per metric ton for a finished coil product.
It was observed that steel mills have announced spot-market increases on an almost weekly basis – many of those well in excess of US$50 per short ton at a time. The same holds in Europe.
Here are some updates on what is happening in the steel market.
The hot-rolled coil (HRC) in the US market is up 88%, from US$565 per short ton, ex-works Indiana in the fourth quarter of 2007 to nearly US$1,060 per short ton in June 2008. Over the same period, the hot-rolled coil in Europe surged 78%, or Є225/metric ton, ex-works Ruhr to Є705 per metric ton.
Cold-rolled coil in the US market is up 79% since December 2007 to US$1,130 per short ton, ex-works Indiana from US$635 per short ton. In Europe, the cold-rooled coil is up to Є770 per metric ton, ex-works Ruhr in early June 2008 from Є550 per metric ton since December 2008.
The Platts Eastern Mediterranean rebar export price was $630 per metric ton, free-on-board Turkey in December 2007, but it has almost doubled to US$1,200 per metric ton recently. In the U.S. market, domestic rebar is up to roughly US$900 per short ton, ex-works US Southeast mill from about US$600 per short ton in December last year. In Northwest Europe, the Platts price assessment of rebar has swelled nearly Є340 per metric ton to Є780 per metric ton since December 2008.
With regard to imported plates in Europe, their price has risen Є830 per metric ton in early June 2008 from Є655 per metric to, including cost of insurance and freight, Antwerp in December 2007. Domestic plates have also gained nearly 27%, increasing to Є845 per metric ton from Є670 per metric ton over the same time period.
On the other hand, domestic plate prices in the U.S. increased 54% since December 2007, to about US$1,240 per short ton, ex-works Southeast U.S. mill, from US$805 per short ton. Imported plates have gained 47% over the same timeframe to US$1,130 per short ton, including cost of insurance and freight, Houston from US$770 per short ton in December 2007.
Scrap prices have surged too. According to Platts, the A3 grade price is up 99% to US$680 per metric ton, freight-on-board, Black Sea from US$342.50 per metric ton in December 2007.
