RBC Capital Markets notes that steel prices have risen significantly in 2011, with North American, European and imported East Asian HRC prices up an average 17.1% year-to-date. Its latest analysis also notes a stablilising in hard coking coal proces and thermal coal proces moving upwards. Freight rates were flat or down during the week January 25, 2011, to Tuesday, February 1, 2011.
Hard Coking Coal: After peaking at $383/t on January 20, 2011, spot hard coking coal (HCC) prices declined for six consecutive trading days as dry weather in Queensland resulted in the resumption of contract shipments. The HCC price declined a total of 10.4% to $343/t over that period. However, prices swiftly reversed direction earlier this week, increasing $16/t (4.7%) over the past two days. “The upswing in price is primarily due to supply concerns, driven by cyclones off the east coast of Australia and to a lesser extent a labour strike at Teck Resources’ second-largest metallurgical coal mine in Canada,” RBC says.
Thermal Coal: Thermal coal prices moved higher following two consecutive week-over-week declines. The price increase was driven by increased thermal coal demand in Asia, a proposed strike action at Columbia’s largest open pit coal mine, and cyclones in Australia.
Iron Ore: Iron ore prices crept higher this week with market activity dwindling ahead of the Chinese Lunar New Year holiday.
Freight: Freight rates were flat or lower this week. Year-to-date, iron ore freight rates from Australia and Brazil to China are down an average 21.5%, while coal freight rates from E. Australia to China are down a much more modest 3.4%.
Steel: Steel prices posted another strong gain this week, led by rebar prices in Europe and HRC prices in North America. HRC prices have moved noticeably higher since late 2010.