FERROUS SUPPLY CHAIN REELING AMID UNPRECEDENTED PRICE HIKES IN STEEL, IRON ORE

Asian Markets , China , Cold-rolled coil , Cold-rolled Steel Sheet , Hot-rolled Steel Sheet , Iron ore , Metals , Negotiating with Suppliers , NEGOTIATOR'S TAKE , Stainless Steel , Steel , Supplier's costs , USA Mar 09, 2016 No Comments

 

NEGOTIATOR’S TAKE: The surge in Chinese steel prices is bound to put pressure on steel prices globally.

 

03.07.16 – Precipitous climb in prices

The ferrous supply chain reeled March 7 amid a precipitous and unprecedented climb in steel and iron ore prices.  Platts 62% Fe IODEX jumped a whopping $10.70/dry mt (or 20%), its largest daily hike ever, to reach $64.20/mt.  Myriad factors were cited as upward drivers of the iron ore market – from pre-construction season restocking, to a flower show in Beijing; to government stimulus (or potential stimulus) after the National People’s Congress, where a gross domestic product target of 6.5-7% was tabled.

 

One obvious driver of iron ore was the steel market. Steel price gains have been hugely outstripping iron ore of late:

 

030716-steel-prices

 

Bullish rush continues

And steel continued its incredibly bullish rush over the weekend. Fundamentally, it is unlikely much changed in China between March 4 and March 7, but spot prices of square billet had surged over $50/mt by March 7 – yes, $50/mt.  Spot rebar prices moved up $19/mt over the same period, to $305/mt FOB on an actual weight basis, while FOB hot rolled coil prices charged up $17.50/mt from March 4 to reach $330/mt.

 

Such gains unseen in at least 8 years

In my time with Platts (I joined midway through 2008) I have never seen such daily gains.  The European and US steelmakers that bemoan China’s economic slowdown and subsequent exports must be bewildered, while also celebrating the uptick.  Prices do not rise like this in a normal steel market. And the macroeconomic backdrop to all of this makes the latest increases even more peculiar. . . . Read the rest of this ProPurchaser sourced article, HERE.

 

SOURCE: Platts.com

AUTHOR: Colin Richardson, Reporter | Read his LinkedIn profile HERE

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Adam

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