The Monthly Index of Raw Steel Metals (MMI) fell 2.4%, as most forms of steel around the world fell, despite coking coal prices hitting all-time highs.

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World steel production

According to the World Steel Association, world steel production fell for the fourth consecutive month in August.

The 64 countries reporting to World Steel produced a total of 156.8 million tonnes (5.06 million tonnes per day) in August, up from 171.3 million tonnes (5.71 million tonnes per day) in April , which was the highest monthly production of the year on a tonnes per day basis.

China remains the world’s largest producer eight times more than the second largest producer, India. Chinese production in August reached 83.2 million tonnes (2.68 million tonnes per day), more than 50% of world production.

China, however, recorded a fourth consecutive month of declining production in tonnes per day. Since April, China’s daily steel production has fallen 17.8%.

American imports

Currently, the EU and the US continue to negotiate the replacement of US Section 232 import duties. A tariff rate quota, similar to the existing EU safeguard, would mean that duty-free allocation would be allowed, along with taxes payable once the volume is reached.

The main point of contention so far has been over the quota. The EU expects a quota based on pre-Section 232 volumes. However, the US expects one based on more recent flows.

However, some market players do not believe that the easing of tariffs will encourage exports from the EU to the United States. The United States is not a significant market for European steel mills, although domestic steel prices in the United States are higher than current tariffs. Thus, EU imports have not increased.

In addition, steel import monitoring and analysis (SIMA) data seem to confirm this trend.

Data suggests that steel import permit applications for the month of September totaled 2,865,000 net tonnes, 8.8% more than in August. Meanwhile, the tonnage of import permits for steel finished in September also increased to 2,144,000 tonnes, up 1.7% from the total final imports of 2,108,000 in August.

However, most imports did not come from Europe but from South Korea (2,073,000 net tonnes in the first nine months), Japan (741,000 net tonnes) and Turkey (669,000 net tonnes).

Coking Coal Price

While steel price increases appear to have started to slow, prices for metallurgical coal transported by sea remain at an all time high amid tight global supply and strong demand. However, market participants expect a price correction in the last four months of the year as Chinese steel consumption declines.

The tight supply is partly due to China’s climate targets, which have allowed coal stocks to decline. Additionally, China halted imports of Australian coal amid a diplomatic row. This import shift has shocked coal supply chains as new buyers set their sights on Australia and China forged new relationships with suppliers from Latin America, Africa and Europe. .

As of October 1, Chinese coking coal prices rose 71 percent year-on-year to CNY 3,402 per metric ton.

Real metal prices and trends

Chinese slab prices rose 1.7% month over month to $ 871 per metric tonne as of Oct. 1. Meanwhile, the price of Chinese billets jumped 3.9% to $ 804 per metric tonne.

Chinese coking coal continued to rise significantly, rising 8.0% to $ 527 per metric tonne.

The three-month US HRC fell 7.1% to $ 1,619 per short ton. Meanwhile, the spot price fell 0.5% to $ 1,934 per short ton.

Finally, US shredded scrap fell 3.3% to $ 467 per short ton.

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