asian steelmakers fuel record iron ore prices

Asian steelmakers fuel record iron ore prices
By Tan Hwee Ann
May 22, 2005

Page Tools
Email to a friend Printer format
Iron ore and coking coal may stay near record highs for at least two years as Asian steelmakers seek the raw materials to produce sheets for the making of cars, washing machines and other products, according to stockbroker Goldman Sachs JBWere.

Prices for high-grade steel such as cold-rolled sheet and heavy plate are still rising, analysts Paul Gray and Andrew Gibson wrote in a new report.

Benchmark iron ore prices increased 71.5 per cent on April 1 when Cia Vale do Rio Doce, BHP Billiton and Rio Tinto, which between them control about 58 per cent of the world's iron ore market, set their annual contracts. Coking coal prices more than doubled.

"Japanese integrated mills are maximising steelmaking productivity in order to meet strong demand for high-value steel products from domestic buyers," said the analysts.

"This entails using the highest-quality raw materials, which are supply-constrained. It is still about availability rather than price for top-quality steelmaking raw materials."

Advertisement
AdvertisementWhile prices for high-grade steel are rising, those for lower, commercial-grade products such as hot-rolled coil are falling, partly amid increasing supply from China, the analysts wrote. Cold-rolled prices in Asia are 40 per cent higher than those for hot-rolled.

Cold-rolled coil products in Asia are about $US200 ($A265) a tonne more expensive than hot-rolled coil, more than double the $US80 a tonne price difference in the last three months of 2004, the brokerage said.

Cold-rolled coil is thinner than hot-rolled coil, and requires ingredients with less impurities to make. Hot-rolled coils can be processed for use in manufacturing, car making and construction.

Higher-quality iron ore and coking coal contain fewer impurities such as sulphur and phosphorus.

- Bloomberg