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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
Accident disrupts coal deliveries to Australian port
Accident disrupts coal deliveries to Australian port
Shanghai, 28 June (Argus) — An accident on the Blackwater railway system has disrupted coal exports from Australia's 102mn t/yr Gladstone port in Queensland, which may take some time to resolve. The accident occurred on the main Blackwater rail line that connects coking and thermal coal mines in the lower and middle Bowen basin into Gladstone, including the Curragh, Jellinbah East, Blackwater and Kestrel coking coal mines, as well as the Rolleston and Minerva thermal coal mines. A truck collided with a car at Raglan — 50km north of Gladstone — at approximately 3am Australian Eastern Standard Time (5pm GMT) on 28 June, bringing down overhead power lines and coming to a stop across the railway track. "The accident is affecting coal services on the Blackwater system, together with freight and passenger trains which use this rail corridor," a spokesperson at Queensland Coal Network operator Aurizon told Argus . Recovery work is under way and the repair process is "expected to take a number of days" to restore the line, according to Aurizon. It is unclear how long repair works may take, although it is likely to be less than a week, an Australia-based source suggested. "It's still a bit early to say [what the impact will be]," another source said. "I'd guess they will try and get one line back up and running at a slower throughput rate while other lines/electrics are fixed." The Moura rail system — which also delivers coal into Gladstone — continues to operate, delivering coal from the lower grade coking coal and pulverised coal injection (PCI) grade mines of Dawson and Baralaba. The Gladstone RG Tanna coal terminal has a vessel queue of 12 as of 25 June, from 13 on 21 May and 23 on 23 April, although this may climb if the derailment disrupts coal deliveries for more than a few days. Hard coking coal typically accounts for around a third of Gladstone's total exports, with lower-grade coking coal and thermal coal each accounting for a third. Tighter supplies ahead The accident is expected to further tighten supplies, especially with upcoming rail closures and maintenance on some of Aurizon's coal-hauling networks in July-August. The closure will involve one planned 96-hour maintenance closure on the Blackwater system and a 84-hour planned closure of the Gregory branch of the rail system. The rail operator will also carry out bridge renewal work, with one track and a two-track bridge closed for two weeks, based on plans announced last year. "It is acknowledged that [this] will result in some capacity constraints during that period," an Aurizon spokesperson said on 7 June. Argus last assessed the premium hard coking coal price at $237/t fob Australia on 27 June, down from $249.50/t on 3 June. The fob Australia low-volatile PCI price was assessed at $186.85/t fob Australia on 27 June, up from $169.15/t on 3 June. The price spread between fob Australia premium low-volatile coking coal and low-volatile PCI has tightened gradually in the last six months, from $143.35/t on 2 January to $50.15/t on 27 June. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US House panel advances waterways’ projects bill
US House panel advances waterways’ projects bill
Houston, 27 June (Argus) — A Congressional committee on Wednesday advanced a bill to authorize a bundle of US port and river infrastructure projects for the US Army Corps of Engineers (Corps). The Water Resources Development Act (WRDA) biennially authorizes projects handled by the Corps' civil works program aimed at improving shipping operations at the nation's ports and harbors, and along the inland waterway system. The traditionally bipartisan legislation also approves flood and storm programs, and work on other aspects of water resources infrastructure. The House of Representatives' Transportation and Infrastructure Committee on Wednesday passed the bill by a 61-2 vote. The Senate Committee on Environmental and Public Works passed its own version of the bill on 22 May by a 19-0 vote. Neither the full Senate nor House have yet voted on the bills, which will need a conference committee to sort out different versions. A key difference is that the House bill did not include an adjustment to the cost-sharing structure for lock and dam construction and major rehabilitation projects. The Senate measure adjusted the funding mechanism so that 75pc of costs would be paid for by the US Treasury Department's general fund, with the rest coming from the Inland Waterways Trust Fund. The 2022 version of the bill made permanent an increase to 65pc from the general fund and 35pc from the trust fund, which is funded by a barge diesel fuel tax. The House committee's decision not to include the funding change drew disappointment from shipping interests. The Waterways Council was "disappointed that the House did not include a provision to modernize the inland waterways system", but was hopeful that conference negotiations would result in its inclusion, Tracy Zea, chief executive of the group, said. The latest House version of the bill authorizes 12 projects and 160 new feasibility studies. Among the projects receiving approval were modifications to the Seagirt Loop Channel near the Baltimore Harbor in Maryland. The federal government would pay $47.9mn towards an estimate $63.9mn project to widen the channel, which would help meet future demand for capacity within the Port of Baltimore. That would include increased container volume at the Seagirt Marine Terminal. The project was in the works before the 26 March collapse of the Francis Scott Key Bridge temporarily diverted freight from Seagirt and many other port terminals. The committee also authorized $314.25mn towards a resiliency study of the Gulf Intracoastal Waterway. The study would consider hurricane and storm damage and identify ways to improve navigation, reduce the maintenance requirements, and provide resiliency. The waterway connects ports along the Gulf of Mexico from St Marks, Florida, to Brownsville, Texas. The House version of the bill also includes provisions to strengthen flood control, wastewater, and stormwater infrastructure. "Critically, WRDA 2024 will help communities increase resiliency in the face of climate change," representative Rick Larsen (D-WA) said. By Abby Caplan and Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
UK government approves steel safeguard extension
UK government approves steel safeguard extension
London, 26 June (Argus) — The UK Secretary of State for Business and Trade has finally approved the Trade Remedies Authority's recommendation to extend steel safeguard duties. The TRA recommended the extension of the import safeguards until June 2026, and the minister has today approved them, just ahead of the 30 June deadline. Participants across the marketplace have been eagerly anticipating the decision, and in some areas this long wait has contributed to a paralysis in trade, alongside weak real consumption. Large decoilers and service centres in the hot-rolled coil market have been postponing procurement decisions in the event the safeguard lapsed — there was a perception among some that this could pressure prices, meaning buyers held off. "Today's decision by the secretary of state to maintain UK steel safeguards is vital to the sector at a time of rising global steelmaking overcapacity and trade deflection from other protected markets," Gareth Stace, UK Steel director-general, said. The government has not yet approved the TRA's other recommendation to suspend import quotas on HRC, given increased volumes that will be required by Tata Steel as it switches off its blast furnaces, imports slab and finished product. If no decision is made by 1 July, this could mean importers facing duties — two companies surveyed by Argus have almost 50,000t of Indian HRC to clear into the July-September other countries' quota, which has historically been around 22,000t/quarter. Tata has asked for its own quota, a suggestion opposed by many traders and importers who believe it would be unfair to give the company its own volume. By Colin Richardson Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Sale of US-Australian Coronado coal firm fails
Sale of US-Australian Coronado coal firm fails
Sydney, 26 June (Argus) — Czech energy investment firm Sev.en Energy has withdrawn from its deal to acquire 51pc of US-Australian coking coal mining firm Coronado Global Resources after the deal was not approved by the Australian government. The Australian Foreign Investment Review Board failed to approve the deal before the deadline for completion on 22 June, according to seller and private equity firm Energy and Minerals Group. Sev.en does not plan to extend or renegotiate the deal. The premium hard coking coal price has fallen from around $330/t fob Australia to Argus' most recent assessment of $241.50/t on 25 June since the deal was made public in September 2023 . Coronado operates Australia's Curragh mine complex in Queensland's Bowen basin, which exports high-grade coking coal and some thermal coal. It also operates the Buchanan mine complex that produces low-volatile coking coal and mostly coking coal at the Logan mine complex, both in the US Central Appalachian region. It expects to produce 16.4-17.2mn t of saleable coal in 2024 , after selling 15.8mn t in 2023. By Jo Clarke Australian metallurgical coal prices ($/t) Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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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.
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