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| Global steel markets on golden run again - 22 Mar, 2010 | ||
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We have seen real recovery in steel prices last week in all the major markets, being monitored by us. The highlights of prices surge in various markets last week are as under 1. China - Prices for long products increased by 4.1% whereas the flat products improved by 3.6% and the overall improvement was 3.8% 2. India - Prices for long products increased by 3.0% whereas the flat products improved by 2.8% and the overall improvement was 2.9% 3. Europe - Prices of flat products increased by EUR 10 per tonne to EUR 40 per tonne, where as prices of long products increased by EUR 10 per tonne to EUR 60 per tonne. 4. Black Sea - Export levels of billets & long products increased by USD 15 per tonne to USD 25 per tonne whereas flat products gained USD 10 per tonne to USD 40 per tonne. As the common ground being cited all over is cost pressure so we need to take a clear view of costs of various stages in steel making, in an integrated scenario of BF-BOF-Caster-HSM route. 1. Hot metal Considering current levels of USD 150 per tonne for iron ore and USD 230 per tonne for coking coal on CFR basis, the cost of hot metal works out to about USD 440 per tonne, which is up by about 70% as compared to low cycle when iron ore was USD 80 per tonne and coking coal USD 150 per tonne on CFR basis on LT contracts. 2. Liquid steel Considering current levels of hot metal prices and USD 425 per tonne for scrap, the cost of liquid steel works out to USD 525 per tonne up by about 57% when scrap was just USD 250 per tonne on CFR basis and hot metal was USD 260 per tonne. 3. Slabs Due to higher cost of liquid steel, the costing of slabs has surged by 57% to USD 560 per tonne now as compared to USD 370 per tonne in low cycle. 4. Hot band As a direct result of higher slab cost, the costing of hot band has surged by 50% to about USD 600 per tonne from earlier level of USD 400 per tonne. Thus the cost of hot band has gone up by almost USD 200 per tonne. This working is based on global standards of consumptions and average costs. It does not take into account selling and general expenses. The full details of costing are available to the subscribers of www.steelprices-india.com This costing structure is true for steel mills which had been buying both iron ore and coking coal on long term basis and not on spot or not having captive resources. Although the costing for Chinese mills will be similar but not the increases as they have been mostly buying iron ore on spot basis last year. The lower cost of iron ore for steel mills having captive mines would also be much lesser. It is reported that Chinese sellers were eying USD 660 per tonne for SS 400 grade last where as Russian mills were offering USD 700 plus for cold rolling grade last week. Thus it is clear that all the steel mills are able to recover their costs at current levels even considering higher input costs likely from April 2010 and therefore the surge is more due to the hype of cost escalations and as such, prices need not be increased further on account of recovering costs but could be due to increased margins. Steel users seem to be having no choice but to accept these price levels. But the danger of restarting of shut capacities by steel mills on positive EBITDA is lurking and we may see a changed pricing scenario after few months when supply exceeds demand. The full details of costing are available to the subscribers of www.steelprices-india.com and you could subscribe to services of www.steelprices-india.com by registering or sending a mail to admin@steelprices-india.com with contact details. This is a paid service with subscription fee of USD 1500 or INR 60,000 plus ST for 12 months. This will keep you in tune with daily happenings in Indian and global steel markets for steel prices. (Sourced from www.steelprices-india.com) | ||
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