Posted by: Spunlite Poles Apr 2021
Implications for customers
Objectives
- Understand drivers of global steel prices
- Be able to articulate potential short to medium term scenarios to help
customers plan ahead
Key Price drivers Simply put “demand exceeds supply”
- Global demand for consumer goods,whiteware,automotive (particularly Evs)
- Major Chinese move to EAF (electric arc furnaces whichuse scrap as the core raw material) from blast furnances (traditional method that combines iron ore,coking coal & limestone) for environmental reasons
- Significant production cuts in China to reduce emissions
- Potential removal of 13% Chinese export rebate
- Mothballed blast furnaces only just starting to reopen
- Key steel raw material prices at or near historic highs
Iron ore
Coking coal
Scrap steel
- Port productivity issues and lack of spare shipping capacity extremely high freight rates
- Govt.stimulus packages ploughing $$ into domestic infrastructure & construction globally
Key raw materials at historically high levels
The Chinese move to EAF production will change the scrap steel supply/demand equation
Globally HRC/Plate prices have risen by >50% in NZD terms since Oct’20 if we take these as the base for most carbon steel products
We have seen a 2 x 10% quarterly increases from NZSteel as a result Since we lag the Asian market by approx 4 months due to our geography its fair to assume that we still have significant price movements ahead of us
