SCRAP PRICES ARE NO LONGER CHEAP BUT DOWNSIDE RISKS ARE LIMITED IN SHORT TERM

The sharp downturn in seaborne coking coal prices has continued during the past month. Australian export prices have retreated by a further 15% (or roughly $25/tonne at the time of writing in late February), to under $155/tonne FOB.

This is $130/tonne below the first quarter contract prices settled between Glencore and NSSMC in mid-December, when spot prices were closer to $300/tonne FOB. Based on MB Indices, Q4 saw spot prices averaging $66/tonne FOB higher than contract prices. This leaves Japanese integrated mills, who were among the lowest cost steel producers in Q4 (source: MBR Global Steel Cost Service) at a large disadvantage of more than $100/tonne today.


As a result of rising costs, Japanese...

Published

Alistair Ramsay

March 01, 2017

00:00 GMT