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Global steel market outlook and the impact of raw materials

Global steel market outlook and the impact of raw materials to China,? Asia-Pacific steel costs remain at the level of 500 U.S. dollars / ton, the highest costs in Germany, which can reach the level of 600 U.S. dollars / ton, India and Russia is only $ 400 / ton.
? iron ore market: Interim oversupply, prices faced downward pressure, in 2016 the average price of $ 85 / t

CFR; Long-term supply gap needs to be filled in order to balance the market; currently tightening capital expenditures in 2020 will determine the size of the size of the supply gap; least 100 U.S. dollars / ton CFR prices to stimulate new projects to balance the market supply

? coking coal prices from the current level of $ 152, and slowly increase to a level of $ 180

one, causes low-margin steel industry

1. raw material prices

According 伍德麦肯兹 cost model, since 2005, by the impact of rising raw material prices, operating cash cost of steel production has grown a fold.
steel production costs in 2005 and 2006 was only $ 280 / t and $ 290 / t, but in 2011 has risen to 560-570 U.S. dollars / ton. Although since 2011 has been to reduce the cost of steel, but still higher than in 2005 and 2006, compared with 70%.
mainly by the price rise of raw materials, including the cost of iron ore, coking coal and scrap. In the past three or more of the total cost of steel production accounts for less than 60% the proportion, but in 2011 this proportion had risen to more than 75%. Currently this proportion dropped to 67%.
2. changing trends in other countries like China are also costs, but the cost of steel itself is due to country-specific.
such as steel cost trends in Northeast Asia, Japan and South Korea in line with the Chinese. But the cost is the highest in Japan, followed by South Korea, and China after Chinas lowest cost.
but is expected to cost differences between steel and Japan will shrink. Mainly because China will import more iron ore, Chinas dependence on maritime market will further increase. At the same time, Chinas rising labor costs is one of the reasons.
steel manufacturing costs are also significant differences between countries. Such as India and Russia to benefit from its own mines iron ore market, it is both relatively low cost. In contrast, the German steel costs by low capacity utilization, high labor costs and the impact of high dependence on imported raw materials and is located highest in the world.
Overall, Asia-Pacific steel costs remained at $ 500 / t. But other areas, such as Germany, the highest cost of steel, which can reach the level of 600 U.S. dollars / ton. In the lower cost of steel in India and Russia, and its level of only 400 U.S. dollars / ton.
3. due to oversupply, lack of pricing power producer

Although steel costs surge, but the manufacturer failed steel companies have not successfully transferred to the rising cost of downstream producers. This is mainly caused by the excess capacity.
huge difference in prices of raw materials and finished steel prices. This is clearly showing weak steel producers on pricing, but it did not smooth the rising steel costs transferred to the terminal consumers. It rests caused by excess capacity. In the role of excess capacity, any increase in steel prices will be offset by excess supply. Data
伍德麦肯兹 steel production capacity database shows: Currently, Chinas crude steel production capacity has more than 1 billion tons / year. Expects Chinas crude steel production in 2013 was around 770 million to 7.8 million tons. The data show that capacity utilization is only 77%.
assume that Chinas steel manufacturers can achieve the level of capacity utilization and South Korea or Japan, or 90%, then the estimated productivity of idle about 143 million tons, this figure is much higher than any of the United States, Japan and South Korea productive capacity of a country.
4. profits of the steel industry has been greatly squeezed
finished steel margins
steel manufacturers in the past few years, the report showed a sharp decline, several steel companies such as shown in the figure, net profit after tax, depreciation and amortization of interest, these companies, including ArcelorMittal, TKS,

Nucor, Gerdau and Russias NLMK, interest tax, depreciation and amortization, net profit after they have a very significant decline.
However, the sharp decline in China is more obvious: Chinas key steel enterprises reported a net profit of 8% from 2004 dropped almost to the level of the current is almost zero.
two, iron ore and coking coal market outlook

1. Chinas future iron ore supply come from?

where miners occupied the mainstream majority of future growth in the amount of supply. Within five years of maritime supply will grow 435 million tons. Interim conservative forecast of new supply will be outside the mine blowout occurs. By 2017, the mine will occupy the top four increments of 67%. The key risk is that non-mainstream miner fails to make expansion!
is worth mentioning that this prediction has been considered a decline in exports volume: India (-1800 tonnes); Southeast Asia (-2200 tonnes); CIS (-1500 tonnes); Iran (-1080 Wan t); United States (-550 tons).
to 2017 the composition of growth in supply

2. ore price outlook

Interim: oversupply, prices faced downward pressure, in 2016 the average price of $ 85 / t CFR (based on 2013 real prices).
term: prices will drop, but not deep down
long: the need to fill the supply gap, in order to balance the market; currently tightening capital expenditures in 2020 will determine the size of the size of the supply gap; least $ 100 / t CFR (real $ 2013) price to encourage new projects to balance the market Live

big wave "supply Tide" hit

3. coking coal prices have nearly cost curve

international price of coking coal from BHP Billiton after the beginning of the quarter to set prices began to rise. But it reaches the highest value in the second quarter of 2011, up to $ 330 per ton. Mainly due to the flood disaster in Queensland region. After this, coking coal prices have dropped to about a quarter of the $ 145 per ton. Basically fallen by more than half! On a longer time scale, the rise in the price of coking coal, mainly due to the push coal costs. Each vertex of falling prices has cost support. The same year we saw after coking coal prices dropped to $ 145 per ton, has been close to the marginal cost producers. After that, we see coking coal prices gradually rise. In the fourth quarter, coking coal prices began to rise to $ 152 / ton.
metallurgical coal prices have fallen below the marginal cost of the world

4. in the short term, we expect metallurgical coal prices will gradually recover.
coking coal prices from the current level of $ 152, and slowly grow to the level of $ 180. Accordingly, other metallurgical coal prices will also have a corresponding increase.
three, cost pressures will decrease

1. driven slowdown in iron ore and scrap

伍德麦肯兹 forecast iron ore prices will continue to decline in the medium term. However, coking coal prices will rise at the current level.
iron ore costs will fall, but the impact of the decline in the price of different countries are very different: the smaller the impact on countries such as USA and Russia monopolized the domestic supply of iron ore supply side; their China, Japan, South Korea and Germany, a strong dependence on iron ore country greater impact.
Also, you can see that the cost of coking coal / charcoal rise from the current level. However, compared with the decline in the cost of iron ore, coking coal, coke costs rise will be relatively small. If we rise smaller coking coal, coke and decrease the cost of a large iron ore costs into account, the cost of hot metal will decline. We expect the cost
alternatives as molten iron scrap / pig iron will fall.
the above information into account, is expected to be finished steel prices decline.
2. mills cost pressures will be partially released

Thus, the expected volatility of steel smelting costs will become increasingly flat.
projected 2013 average cost of finished steel is about 501 U.S. dollars / ton, compared with 2012 decreased by 6%, in 2014 there will be a 2.4% decline. As previously described above, the expected price of steel will continue because of excessive supply capacity while maintaining relatively stable.
3. Steel margins increased slightly

because steel prices will remain stable, lower costs, so there will be a slight rise in profits on steel.
can be foreseen, Germany, China, United States and Japan steel margins will rise in 2013. But the situation is not the same for each country, Japan would benefit from increased industrial concentration, more conducive to the profits of the steel industry.
four, suggested Chinese companies concerned about their balance sheets

mass production, low profits of the high leverage makes some Chinese steel industry to an unhealthy direction. At very low margins expanded production, has led to a very high throughout the steel industrys financial leverage. As the government continued to subsidize
state-owned steel companies, the entire market in the production - the profit relationship disorders. Even if profit is close to 0, the production is still high growth.
which production is carried out at a very low profit situation, which resulted in high leverage Chinas steel industry. The gearing ratio
whole industry from the past to the present growth of 50% to 70%. This is only a country level, but strictly speaking, some steel companies nearing bankruptcy. Even more frightening is that the loan, the proportion of short-term debt increased rapidly in the last three years, the high pressure steel enterprises financing.



CFR;长期需要填补供应缺口,以平衡市场;目前资本支出紧缩规模将决定2020年后供应缺口的大小;至少需要100美元/吨 CFR的价格以激励新的项目来平衡市场供应



1. 原材料价格上涨




2. 其他国家成本的变化趋势也类似于中国,但是钢铁成本本身是因国而异的.





3. 由于供应过剩,生产者缺乏定价能力





4. 钢铁行业的利润被大大挤压





1. 中国未来铁矿石供应从哪里来?




2. 铁矿石价格展望

中期:供大于求,价格面临下行压力,2016年平均价格$85/t CFR(基于2013的真实价格).


长期:需要填补供应缺口,以平衡市场;目前资本支出紧缩规模将决定2020年后供应缺口的大小;至少需要$100/t CFR (real 2013$)的价格以激励新的项目来平衡市场供应


3. 焦煤价格已经接近成本曲线



4. 在中短期内,我们预计冶金煤的价格将逐渐恢复.



1. 铁矿石和废钢驱动放缓






2. 钢厂的成本压力将得到部分释放



3. 钢铁利润率将轻微上升