HIGHLIGHTS: Iron ore price drop; Taranto DRI doubts; Turkey feels Iraq crisis

Editor Vera Blei looks at the main news covered by Steel First this week.

Paragraph entered by Atlantic migration, in order for SteelFirst articles to display correctly on Metal Bulletin.

Benchmark iron ore spot prices have seen another sudden and dramatic drop towards the end of the week.

near-$3 drop on Thursday June 12 triggered a huge sell-off in the OTC iron ore market. International traders hedging large cargoes led the push down across the forward curve.

Metal Bulletin’s 62% Fe iron ore index closed at $90.81 per tonne on Friday June 13. Based on the indicators from the derivatives market, prices are likely to fall to their lowest level, $86 per tonne, since September 2012.

On the back of the recent price drops, Chinese iron ore traders are facing more difficulties securing letters of credit for iron ore cargoes. 

Taranto & DRI
In Europe, Italy’s Taranto steelworks has dominated the headlines.

The future of the Riva Group-owned Ilva and its Taranto plant may well lie in the hands of foreign investors. We looked at why a link up of ArcelorMittal, Marcegaglia and Arvedi might be interested in buying the problem-ridden company

Whatever next steps are considered, much will depend on the freshly appointed new special commissioner for the Taranto plant, Piero Gnudi.

According to a plan drafted by former commissioner Enrico Bondi, Taranto could switch to using direct reduced iron (DRI) instead of iron ore in a bid to reduce emissions. 

However, those plans have been met with scepticism in the market, particularly due to the lack of available and cheap natural gas in Italy.

Global DRI output is expected to reach 200 million tpy by around 2030, up from 75.2 million tonnes in 2013, according to engineering company Midrex Technologies. 

Iraqi crisis affects Turkey
Elsewhere, the Turkish rebar market has been badly affected by the crisis in Iraq, with the government stopping funding for projects in the northern part of the country.

Iraq usually buys about 30,000 tonnes of rebar per month from each of the Turkish steel producers in the adjacent region. Butt rebar trade between Turkey and Iraq came to a complete halt, and no trades were heard this week.

Steel vs Aluminium
We also continue our Steel vs Alumimium debate – this week’s highlight was an interview with Severstal North America general manager, Dr Prabhat K Rastogi. He made a strong case for steel to remain the dominant material for the automotive industry.

You find the full portfolio of articles and videos about this on-going debate on our dedicated Steel vs Aluminium page.

New on Steel First
What’s new on Steel First? This week we launched a new monthly price assessment for grade-S235 tube material exported from Turkey

You can now also find the Nickel Cash LME Daily Official price in our database.

For Steel First’s portfolio of steel and raw materials prices, visit www.steelfirst.com/SteelPrices.html.

Russia’s anti-dumping probe into rebar imports from Ukraine is expected to come to an end soon. 

Local steel mills in Russia initiated the probe after new long-steel facilities with a total capacity of about 3 million tpy were launched in Russia last year. The on-going political tensions between Kiev and Moscow may have accelerated the investigation, according to some market participants. 

China stainless pain
China is bearing the brunt of the impact of Indonesia’s nickel ore export ban, while stainless mills outside of China are set to benefit from the fact that Chinese mills have lost their low production cost advantage.