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According to S&P Global Commodity Insights, cheaper iron ore and coking prices will lower billet production costs in the blast furnace route, while higher scrap prices are driving electric arc furnace-based production costs in the opposite direction moving into May.
According to Commodity Insights data, the difference between the average cost per metric tonne of billet produced by EAF steelmakers and the blast furnace-converter route is anticipated to expand significantly, from $59/mt in April to $76/mt in May.
The May estimates are based on the April raw material prices for delivery one month in advance, taking into consideration the 10% scrap usage for the BF-converter route and the 100% scrap usage for EAF. The scrap yield is assumed to be 89% in the EAF calculation.
The per-ton cost of producing billet via the BF-converter route is predicted at $487/mt in April, down $8/mt month on month, while EAF steelmakers expect a $9/mt increase to $563/mt.
According to Commodity Insights data, Platts estimated the average seaborne pulverised coal injection price for CFR China in April to be $135.24/mt, which was less than the average of $142.13/mt for March.
The data revealed that the average seaborne 62%/60% met coke price evaluated by Platts on a FOB China basis in April was $279.24/mt, which was lower than the preceding average of $297.58/mt in March.
The April average for Platts 62% iron ore fell to $110.91/dmt from $109.53/dmt in March, following continued weakness and widespread pessimism about Chinese property and infrastructure demand.
The data showed that for ferrous scrap, HMS 1/2 80:20 grade prices on a CFR Taiwan basis increased by $8.40/mt to an average of $359.10/mt in April, while HRS101 assessment prices remained stable at an average of $390.10/mt for April, compared to $390.80/mt in March.
EAF-based billet production is expected to face even stronger headwinds into May following seasonal summer power price hikes, although a tepid South Korean import market continues to weigh on seaborne scrap prices while higher power prices will influence Taiwanese mills to reduce production volumes, according to several trader and mill sources.
Platts assessed 5SP 130 mm billet on a CFR Southeast Asia basis at $527/mt, $3/mt higher on the day April 30 and up $15/mt month on month, according to data from Commodity Insights.
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