Steel
Overview
The price indices in our Argus Ferrous Markets and Argus Global Steel services are widely used by companies in physical supply contracts around the world – for iron ore, coking coal, hot-rolled coil (HRC) and ferrous scrap.
Many of them are used as the settlement prices for cash-settled futures contracts launched by exchanges to allow users of the derivatives who also transact in the physical market to minimize basis risk while hedging. These cash-settled monthly futures contracts are settled against the arithmetic mean of all the published Argus prices during each calendar month.
Using indices allows companies to trade material on an index-linked basis, not only via fixed-prices sales. This offers significant advantages when prices are volatile, yet the modern finished steel market remains primarily transacted on a fixed price basis. The addition of futures markets offers opportunities to enhance supply chain resilience further.
Latest steel news
US inflation rises in October to 2.6pc
US inflation rises in October to 2.6pc
Houston, 13 November (Argus) — US inflation ticked higher in October, led by monthly gains in shelter, a reminder that the last lap in the Federal Reserve's marathon to bring inflation to its long-term target remains a challenge. The consumer price index (CPI) accelerated to an annual 2.6pc in October, in line with analysts' forecasts in a survey by Trading Economics, from 2.4pc in September, which was the lowest since February 2021, the Labor Department reported today. Core inflation, which strips out volatile food and energy prices, rose at a 3.3pc rate, unchanged on the month. The energy index contracted by 4.9pc over the 12 months, slowing from a decline of 6.8pc through September. The gasoline index fell by 12.2pc, slowing from a 15.3pc decrease the prior month. The fuel oil index fell by 20.8pc. Federal Reserve policymakers last week cut the target rate by a quarter point, following a half-point cut in September that kicked off an easing cycle from then-23-year highs. Inflation has slowed to near the Fed's 2pc target from highs above 9pc in mid-2022 that proved to be a major impetus behind president-elect Donald Trump's victory at the ballot box on 5 November. The CME's FedWatch tool today gives near-80pc odds of another quarter-point cut in December. "The economy can develop in a way that would cause us to go faster or slower" in adjusting rates lower, Fed chair Jerome Powell told reporters last week after the Fed decision. The food index rose by an annual 2.1pc, slowing from a 2.3pc gain through September. Shelter rose by an annual 4.9pc, unchanged. Transportation services rose by 8.2pc. New vehicles fell by 1.3pc while used vehicle prices fell by 3.4pc. Services less energy services, viewed as core services, rose by 4.8pc. On a monthly basis, CPI rose by 0.2pc in October, a fourth month of such gains after falling by 0.1pc in June. Core inflation rose by 0.3pc for a third month. Shelter accelerated to a 0.4pc monthly gain, accounting for over half of the monthly all-items increase, after a 0.2pc gain. Energy was unchanged in October after falling by 1.9pc in September from the prior month. Food rose by 0.2pc on the month, following a 0.4pc gain. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
CNGR’s NNI produces high-grade Ni matte in Indonesia
CNGR’s NNI produces high-grade Ni matte in Indonesia
Singapore, 13 November (Argus) — Nadesico Nickel Industry (NNI), the Indonesian subsidiary of major Chinese lithium-ion battery cathode active material (CAM) precursor manufacturer CNGR, produced its first batch of high-grade nickel matte (HGNM) on 6 November. NNI has the capacity to produce nickel pig iron (NPI), low-grade nickel matte (LGNM) or HGNM, depending on market conditions and profitability. The company is ramping up six production lines in north Morowali, Central Sulawesi, while simultaneously constructing another two lines. LGNM production capacity stands at around 80,000 t/yr in nickel metal equivalent, while the full ramp-up of all production lines could yield up to 40,000t of nickel metal equivalent in HGNM, according to CNGR. But market participants anticipate that the NNI project will primarily focus on NPI production, with each production line having a capacity of around 12,000 t/yr in nickel metal equivalent in NPI. HGNM is used in the production of nickel sulphate, a feedstock for lithium-nickel-cobalt-manganese oxide CAM battery or nickel production. CNGR operates another HGNM project in Indonesia with a production capacity of 60,000 t/yr in nickel metal equivalent, along with two other projects producing LGNM, with a combined nameplate capacity of 55,000 t/yr. CNGR, from its Indonesian operations, produced approximately 60,000t in nickel metal equivalent from January to September. This figure excludes output from its first and only class I nickel Indonesian refinery, ZWDX, which commenced production in June 2023 and has a nameplate capacity of 50,000 t/yr. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Japan to offer $65bn fund for AI, semi-conductors
Japan to offer $65bn fund for AI, semi-conductors
Tokyo, 13 November (Argus) — The Japanese government will offer more than ¥10 trillion ($65bn) in public funding for the semi-conductor and artificial intelligence (AI) sectors until March 2031, aiming to bolster domestic investment. The government is shaping a new policy to support the chip and AI industries, Prime Minister Shigeru Ishiba said on 11 November, adding that the fund is aimed at stimulating public and private entities to invest ¥50 trillion in the sectors over the next decade. This forms part of Ishiba's policy to revitalise the Japanese economy, which he believes is necessary to boost domestic and foreign investment. The country needs more investments similar to that by Taiwan Semiconductor Manufacturing (TSMC), Ishiba said, referring to TSMC's project in south Japan's Kumamoto prefecture. The Taiwanese manufacture built its first fabrication plant in Japan in 2024 and is expecting to start volume production by the end of the year. The company is also planning to build another facility in Kumamoto, targeting commissioning by the end of 2027. Strengthening financial support for the chip industry is in line with the economic policy outlined by the former government under Fumio Kishida. The previous administration allocated ¥3.9 trillion in subsidies, including for TSMC's investments, over the past few years. The ¥10 trillion fund will be a new financial scheme in addition to the ¥3.9 trillion chip subsidy, minister for economy, trade and industry Yoji Muto said on 12 November. The trade and industry ministry is also attempting to help industries introduce generative AI as part of the country's wider digital transformation policy. Lingering labour shortages have prompted the country to transform its economy into a more productive system, with expanded use of digital technologies. The government is still in discussions around how to generate the ¥10 trillion fund, according to Muto, adding that the country is not planning to issue government bonds or increase taxes. Yusuke Maekawa Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
EU steelmakers ask for scrap export curbs
EU steelmakers ask for scrap export curbs
London, 12 November (Argus) — European steel producers association Eurofer continues to lobby the European Commission to curb scrap exports as the industry looks to decarbonise. On 12 November, Eurofer reiterated its view that the commission "recognise steel scrap as a strategic secondary raw material under the critical Raw Material Act, ensure the robust implementation and effective enforcement of the revised EU Waste Shipment Regulation to ensure compliance with the EU environmental standards in third countries and avoid circumvention, while securing a sustainable and diversified raw materials supply by leveraging bilateral Free Trade Agreements, granting reciprocal market access and eliminating illegal export bans and other distortions." EU scrap consumption is due to increase significantly in the coming years. "Scrap exports to third countries without comparable environmental and social standards [therefore] need to be restricted to ensure that the use of ferrous scrap generated in the EU contributes to sustainability objectives aligned with the EU ones," Eurofer said. The EU has long been a net exporter of ferrous scrap, with outflows of the material standing just shy of 11mn t in the first eight months of this year, customs figures show. Last year the EU exported 17.67mn t of ferrous scrap, a 5pc rise on the year. The bloc's trade has always been heavily focused on Turkey, the world's largest importer of ferrous scrap, with annual trade ranging from over half to two-thirds of total exported volumes in the past five years. Turkey, with around three-quarters of steel production based on electric arc furnace route, is heavily reliant on European-origin material. Turkey's share of EU exports increased in recent years after the UK left the EU, but the share of shipments from the bloc started rising from the second half of the mid-2010s, when Russia, another major ferrous scrap supplier to Turkey, started restricting exports. Russian exports of scrap to Turkey fell from around 2.5mn t in 2018, to 1.9mn t in 2019 and 2021 and to just over 400,000t in 2022-24. The EU's major trading partners for scrap include Egypt, India and Pakistan, all of which are third countries to the EU and non-OECD countries whose import volumes have been increasing as Asia continued to grow its steelmaking capacities, mostly through the IF (induction furnace) route. The EU's intention to restrict scrap exports has been deeply unsettling for the many developing markets' representatives, as much as its movement towards the implementation of CBAM (Carbon Border Adjustment Mechanism), which will reduce the possibility of exports to the EU from countries where steelmaking processes and carbon emissions are not compliant with the EU's stricter standards. By Corey Aunger and Katya Ourakova Annual EU-27 ferrous scrap exports metric tonnes Country 2020 2021 2022 2023 2024 Turkey 11,247,281.0 12,676,091.0 10,327,403.0 10,088,491.0 6,826,876.0 Egypt 1,076,930.0 1,810,866.0 1,431,831.0 1,570,352.0 1,237,722.0 India 443,130.0 294,994.0 1,108,881.0 1,906,608.0 576,008.0 Pakistan 853,178.0 727,466.0 700,879.0 731,182.0 371,943.0 Switzerland 455,034.0 511,098.0 463,440.0 339,894.0 355,709.0 Norway 314,627.0 294,956.0 396,933.0 451,873.0 309,299.0 Morocco 197,803.0 329,901.0 556,417.0 442,498.0 258,630.0 UK 361,741.0 307,281.0 307,173.0 275,125.0 203,786.0 US 622,523.0 574,264.0 316,077.0 694,507.0 182,064.0 Moldova (Rep. of) 251,184.0 344,609.0 79,788.0 192,964.0 179,579.0 Republic of North Macedonia 74,951.0 106,400.0 112,176.0 165,404.0 115,626.0 Bangladesh 107,611.0 149,570.0 700,108.0 388,936.0 91,410.0 Total 16,371,459 18,542,680 16,843,989 17,674,602 10,822,245 2024 data for January to August — Customs and Eurostat data Turkey's total and European scrap imports, 2010-24 Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Spotlight content
Browse the latest thought leadership produced by our global team of experts.
Moving target: Using an index to track volatile steel prices
Flat steel prices have experienced unprecedented volatility since 2020. Against this backdrop, an increasing number of buyers have started to link their purchasing to price indexes.
Insight papers - 16/05/24Argus launches six new HRC cif Italy origin differentials
The market for importing hot-rolled coil (HRC) to the EU is being driven by a growing number of external factors that are widening differentials for prices from various origins, creating the need for new price assessments that improve transparency for an increasingly complex market.
Insight papers - 04/02/24Hydrogen’s role in decarbonising steel production
The steel industry is a global colossus. Each year 6 billion tonnes of steel and steelmaking materials are moved around the world by truck, rail and ship. Despite a relatively light per tonne carbon footprint, the sheer size of the boot means the sector accounts for 7-9% of global CO2 emissions.
Explore our steel products
FOB China HRC
The rise of the Chinese steel market has moved in lock-step with the development of the country’s economy. Crude steel output soared since the start of the millennium and that spurred raging raw material demand, which upended the coking coal and iron ore markets.
By 2012, China had established itself as a source of steel without peer, and while export volumes have moderated since then, China still exerts the dominant influence over Asia’s steel pricing.
In March 2019, the London Metal Exchange (LME) launched a new FOB China HRC futures contract to help market participants to manage their price risk. The contract is settled against the monthly average of the daily price assessments published in our Argus Ferrous Markets and Argus Global Steel services, and it has rapidly established itself as the most successful finished steel futures launch to-date.
European HRC
Current European steel capacity is most densely concentrated in an area encompassing parts of France, Germany and Benelux. While capacity has rationalized, the European industry has proven resilient throughout decades of change and faces the problems of raw material and finished goods price volatility as well as globalized price competition.
Steel prices remain regional by nature and, like Asia, Europe is only beginning to experiment with steel price indexation. To support market participants with their price risk management, CME Group launched a North European HRC futures contract in March 2020. The LME has announced plans to launch their own N. Europe HRC futures contract in late 2020.
Argus has been selected as the provider of choice by both exchanges, and both futures contracts will be settled against the monthly average of the daily Argus price assessments provided in our Argus Ferrous Markets service.
CFR Taiwan Ferrous Scrap
The US East Coast and Europe look to Turkey to set bulk scrap price direction. Conversely, the US West Coast & Japanese supply looks to Taiwan to set container scrap price direction, which sets wider Asian scrap pricing.
Container markets parcel sizes are more liquid and frequently-traded markets, and the LME has launched a new Steel Scrap CFR Taiwan futures contract in July 2021 to support market participants hedge their risk.
Argus has been selected as the provider of choice by both exchanges, and both futures contracts will be settled against the monthly average of the daily Argus price assessments provided in our Argus Ferrous Markets and Argus Global Steel service.
