July wire rod imports reported in our earlier post have been revised to 94,000 tons. The earlier figure was incorrect because it did not account for a change in wire rod import codes put into effect in July. See the updated spreadsheet below.
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There has been a lot of news lately about how the largest iron ore producers want to change the traditional yearly contract negotiations with their biggest customers. If you are trying to follow what’s going on and you need some background on the iron ore market and history, you can get some answers online through the sources below. All the sources are free except the subscription pricing data described at the end of the post.
Who are the biggest iron ore producers?
USGS (U.S. Geological Survey) publishes the Mineral Commodity Summary on iron ore which lists the output of the largest producing countries and their reserves. I have already mentioned the publications of the Raw Materials Group and UNCTAD in an earlier post, but RMG also have a good summary of the largest producing companies (as well as a general view of what’s going on) in the abstract describing their report The Iron Ore Market 2007-2009.
How much seaborne trade in iron ore is there?
The Australian Bureau of Agricultural and Resource Economics (ABARE) has a quarterly report called Australian Commodities where it lists the largest importing and exporting countries, describes the current pricing issues, and gives market and pricing forecasts. Metallurgical coal is also discussed in that document, for those who are interested.
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Crude steel production in China declined 5% from 44.9 million metric tonnes in July to 42.6m tonnes in August. Net exports increased from 5.8m tonnes to 6.4m tonnes, and the export share of finished steel production continued its climb from 18% in July to 20% in August.
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US long products imports licenses dropped to 207,000 short tons in August compared to July actuals of 212,000 tons. This is due mainly to lower licenses for importers of rebar (where licenses reached 69,000 tons in August compared to July actuals of 97,000 tons) and wire rod (62,000 tons licenses in August compared to 87,000 tons July actuals). You will also notice in the data below that July license applications were (unusually) much higher than actual July imports by 28%. This was mainly the result of wire rod imports which were much lower at 36,000 tons than wire rod licenses at 87,000 tons, most likely because of turmoil related to the June 3rd US International Trade Decision on sunset reviews for wire rod imports.
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NOTE: There’s an updated (for Q4 2008), revised (in Q1 2009) & expanded version of this presentation here:
Here’s a shortened version of a presentation I made last week to the MSCI Economic Summit: Forecast 2009 meeting in Chicago. It’s a great event if you get the chance to go.
The essence of what I said was 1) China’s continued growth will underpin the pricing of raw materials and that will provide a floor to steel product pricing 2) Absent a(n unlikely) rapid change in the value of the $, US steel exports will be sustained and imports will remain in relative check 3) The changing structure of the industry (consolidation, integration & cross-border ownership) supports a disciplined approach to capacity management & formation making any softness in pricing likely to be temporary and relatively shallow. 4) Above all, not all commodities will behave in exactly the same way. The fundamentals for steel are still very good – even if prices go down, margins can be sustained and perhaps even enhanced. This may not come through in this shortened version but that’s what I meant.
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If you are following steel production and trade in China, you might be interested in the spreadsheet below which we will update each month. Since data is typically available six weeks after the end of each month, we are currently posting the July figures. August results should be available by September 20th.
China finished steel production fell 4.4% in July to 40.89 million metric tonnes, reversing the average monthly growth trend through June of about 3%. Net exports rose to 5.8m tonnes, the highest level since April 2007’s 5.5m tonnes. Finally, exports as a share of finished steel production grew from 12% in June to 18% in July.
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