Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

The world’s fifth largest steelmaker Nippon Steel is all set to beat its annual profit forecast. Earlier in August, the company had upgraded its annual profit guidance by 54pc for this year. Outperformance of units in the US and India to drive profits despite comparatively slower pick up in Japan.  


The steel maker is optimistic about the profits following improved margins when the global finished steel prices are robust outside Japan and iron ore import prices have plunged on Chinese demand concerns.  


The company is witnessing sharp rise in earnings from its units in India, the United States and Brazil. Overall business momentum is outperforming the expectations in July and August, said Executive Vice President Takahiro Mori in an interview to Reuters.  


High steel prices

In the US domestic market, prices for HRC were expected to reach high peak above $2,000/mt mark, however, on contrary, strong demand pushed prices further up by $200/mt beating expectations. In Asia, despite slight drop, HRC prices maintained above $880-900/mt cfr Southeast Asian buyer.  


Most steel mills continued to benefit out of high profit margins when the gap between finished steel against raw material buying stayed broadened.  


Iron ore prices plunge

Spot iron ore prices in China had peaked above $233/mt cfr China in May and lost by over $90/mt or 40pc within three month’s period. Stricter production cuts and pollution control efforts weighed down prices. With some logistics challenges yet to be resolved, prices may stay higher for a while, however, a rebound above $200/mt mark is unlikely, believe experts.  


The upcoming peak demand season from infrastructure and automotive sectors in Asia, China and Japan is expected for the next 2-3 months. However, risks of production limits by automakers on chip shortages could affect steel demand up to an extent, according to Nippon Steel.  

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