The SteelOrbis Fall 2012 Conference and 67th IREPAS Meeting held in Munich featured the presentation of Peter Marcus of World Steel Dynamics (WSD), who said that the steel industry is very likely heading to a "rutted road" in which the industry's competitive landscape may include highly volatile prices for steel products and steelmaking raw materials, stagnant steel demand due to the slowing of the speed at which the fixed asset investment flywheel is spinning, and a flattened world cost curve for the production of hot rolled coil reflecting reduced operating costs of mills amid far lower prices for steelmaking raw materials. Mr. Marcus forecasted that iron ore prices may decline down to $88/mt CIF China during the last quarter of this year and may remain at an average of $95/mt CIF China in 2013. He added that, due to major oversupply outside of China and less-than-expected reductions in Chinese steel output, prices are still high enough for low cost mines to generate good profits.
In addition, Marcus said that coking coal prices may see low levels of $135/mt FOB Australia in the fourth quarter of this year and may stay at an average of $155/mt FOB Australia next year. The cost curve to produce good quality coking coal has steepened sharply in the past decade, he said. His forecast for the price of ex-US HMS I/II 80:20 delivered to Turkey for the last quarter of this year is $360/mt CFR, and $365/mt CFR for next year.
Regarding world steel production, WSD predicts that global steel production for the whole of 2012 will rise by only 2.08 percent to 1.55 billion mt, followed by an increase of only 1.45 percent to 1.57 billion mt in 2013. These anemic gains in production, of course, will not be sufficient to relieve the oversupply for steel products and steelmakers' raw materials, Mr. Marcus told attendees.