Steelmaking raw material prices ease in July

As of July 24, prices for coking coal, zinc, and aluminum have all eased 5-8% month on month (m/m). Iron ore, pig iron, and busheling scrap prices slipped 1% from June to July. Shredded scrap was the only product to experience a monthly increase, with prices rising by 1%.

Raw material prices for all but one product are cheaper compared to three months prior, with some experiencing double-digit declines. Table 1 summarizes the percentage changes from one month, three months, and one year ago for each product.

Iron ore

Following a rebound in April, the import price of 62% Fe Chinese iron ore fines has trended downward through June and July. The latest weekly spot price is $103 per dry metric ton (dmt) delivered North China. Prices have eased by 1% over the past month and are now at a 15-week low, just slightly above the 2024 low of $101/dmt seen in April. Current prices are 11% lower than those from this time last year.

Coking coal

Prices for premium hard coking coal have remained relatively stable across the last three months, following a decline seen earlier in the year. The latest weekly price is $228/dmt, only slightly higher than mid-April’s $227/dmt price, the lowest level of this year. Coking coal prices have fallen by 8% in the last month and are 9% lower than levels three months ago. They are 3% lower compared to this time last year.

Pig iron

Since stabilizing last August, pig iron prices have generally trended higher since last November. Prices eased 1% from June to July to $460/dmt. While down, prices are on the higher side of what we have seen over the past year. Pig iron prices are 3% higher than three months prior but 9% lower than levels seen this time last year. Recall that pig iron prices had jumped more than 60% in April 2022 following the invasion of Ukraine by Russia, reaching a historic high of $975/dmt.

Note: Most of the pig iron imported to the US had come from Russia, Ukraine, and Brazil. This report uses Brazilian prices and averages the FOB value from the north and south ports.

Scrap

Steel scrap prices have generally shifted lower across 2024 following their peak last December. SMU’s shredded and busheling indices were both stable from June to July. Shredded scrap ticked up to $378 per gross ton (gt) in July, just 1% higher than June’s eight-month low. Busheling scrap prices declined 1% in July, now at a 19-month low of $375 per gt. Scrap prices are down 6-9% compared to levels three months ago and are 3-16% lower than tags seen this time last year.

Changes in the relationship between scrap and iron ore prices offer insights into the competitiveness of integrated mills, whose primary feedstock is iron ore, compared to mini-mills, whose primary feedstock is scrap. Figure 5 shows the prices of mill raw materials over the past three years.

To compare these two feedstock materials, SMU divides the shredded scrap price by the iron ore price to calculate a ratio. A high ratio favors the integrated producers and a lower ratio favors the mini-mill/EAF producers (Figure 6).

Integrated producers had mostly held the cost advantage from late-2021 through mid-2023. The advantage then briefly shifted to EAF producers, but began moving back higher last December. The ratio as of July 24 remains in relatively neutral territory at 3.66.  

Zinc and aluminum

Zinc is used in galvanized and other coated steel products. Following the multi-year lows seen last year, spot prices rapidly increased in April in May, but appear to be losing steam over the last few weeks. After surging to a 13-month high in late May, the latest LME cash price for zinc has eased 5% m/m to $1.20 per pound. The April/June surge had prompted some mills to increase their galvanized coating extras. Zinc prices are 5% lower than levels three months prior but up 11% compared to July 2023 (Figure 7).

Aluminum prices, which factor into the price of Galvalume, also rose earlier this year to reach a one-year high of $1.22/lb in late May. The latest LME cash price has eased 8% m/m to $1.03/lb, one of the lowest prices recorded since late March. Aluminum prices are 12% lower than tags three months prior, but 5% greater than levels seen this time last year. Note that aluminum spot prices sometimes have large swings and return to typical levels within a few days, as seen in Figure 7.