Iron and Steel Commodity
- Iron and Steel Commodity Key Factors and Trends
- Steel Majors - US, Canada
- Steel Majors - EU
- Steel Global
Iron and Steel Commodity Key Factors and Trends
Iron Ore trends
- While iron ore can spike - the global buyers are unwilling to pay up - willing to wait to buy on next price settling down.
When iron-ore price rose above $110 a ton last month, Morgan Stanley wrote that the commodity was “becoming more detached from its fundamentals. .. The current disconnect could set iron ore up for a significant price decline, bringing to mind the $40/ton correction in August 2019, when Vale’s shipments improved over the summer .. We expect the iron-ore price to decline to $80 a ton by the end of December.- Morgan Stanley
Steel and Iron ore demand highly seasonal
- After Sept - construction slows down in China - so the supply chain demand of steel and iron ore declines.
2021 to be peak steel production
“With all the stimulus in place I think that will underpin Chinese steel production over the next 12 months at around one billion tons or so,” he said, which is roughly what the country produced in 2019." - Citibank
China recovers and Iron ore demand up on Infra/Construction Boom on Stimulus
Steel is widely considered to be a proxy for Chinese economic activity because roughly 90% of production is used locally.
China produced 91.6 million tons of crude steel in June 2020, up 4.5% y 2019, the World Steel Association said. Steel capacity utilization rates in China rebounded above 90% in June, from close to 70% when the virus peaked locally. Also, another key component for steel making - metallurgical coal, is supporting profit margins at Chinese mills and encouraging high production rates
Global steel production fell by 7% on Covid-19
This fall was led by steep declines in the U.S., Europe and India.
In the U.S. production fell 35% in June.
Infrastructure and construction projects require a lot of steel.
- Chinese manufacturing activity is also accelerating.
- In June, spending on infrastructure in the country rose by 6.8% and new housing starts increased by 8.9%
Brazil Iron ore production temporary disruptions led to iron ore price spike
Iron’s recent rally also owed much to supply disruptions in Brazil where some mining operations had to shut down temporarily following virus outbreaks. * It's output recovered however by June rose by 23% compared with the average for the previous five months, and it stuck with annual guidance for production of as much as 330 million tons.
Aug 2020 - Iron Rises Fast to $121/ton
- However Iron ore have risen to a five-year high of $126 in 2019 but crashed -35%
- It's output recovered however by June rose by 23% compared with the average for the previous five months, and it stuck with annual guidance for production of as much as 330 million tons.
Steel Majors - US, Canada
NUE c44 M=13b 16xf PS=0.6x PB=1.3x 5y$1.4% e-5.4%
- Nucor - electric, scrap conversion
RS c104 M=6.5b 16x PS=0.67 PB=1.3x 5y$1%E17%
- Reliance Steel