Raw Materials Prices: Iron Ore, Coking Coal, Pig Iron, Scrap, Zinc

Written by Brett Linton

Among steelmaking raw materials, the prices of pig iron, shredded scrap, busheling scrap and aluminum rose again in March on top of large gains in previous months. Prices increased as much as 14% month-over-month for those four products.

Iron ore prices are slightly down compared to levels one month prior, while coking coal prices have declined 20% in that time frame. Pig iron and shredded scrap prices have increased 9-10% since February, and busheling scrap prices have risen 14%. Zinc prices are flat compared to one month prior, while aluminum prices are now above $1.00 per pound and are at levels not seen since June 2018.

Table 1 summarizes the price changes of the seven materials considered in this analysis. It reports the month/month, three months/three months and year/year changes as a percentage.

Iron Ore

The Chinese import price of 62% Fe content iron ore fines has been on the rise since May 2020. Figure 1 shows the price of 62% Fe delivered North China at $164.8/dmt as of March 17, down over the last three months, but up significantly over recent years.

Coking Coal

The price of premium low volatile coking coal FOB east coast of Australia declined throughout much of 2020, but bounced upwards in 2021 to reach a 10-month high in February. Prices have since declined, currently at $116.5 dollars per dry metric ton as of March 17 (Figure 2). Recent coking coal prices remain low compared to years prior. 

Pig Iron

Most of the pig iron imported to the U.S. currently comes from Russia, Ukraine and Brazil. This report summarizes prices out of Brazil and averages the FOB value from the north and south ports. The latest data through March shows an average pig iron price of $533 per metric ton, up 9% over the previous month, up 18% from three months prior, and up 64% from levels one year ago. Pig iron prices had declined since mid-2018, but increased each month from June 2020 through January 2021 (Figure 3).


Hot rolled steel prices fluctuate up and down with the price the mills must pay for their raw materials. Changes in the relationship between scrap and iron ore prices offer insights into the competitiveness of integrated mills, whose primary feedstock is iron ore, versus the minimills, whose primary feedstock is scrap. Figure 4 shows the spread between shredded and busheling, both priced in dollars per gross ton in the Great Lakes region. March scrap prices remained strong, up 10-14% from February, and up 61-92% compared to this time last year.

Figure 5 shows the recent spread between the price of iron ore, at $164.8 per dry metric ton, and shredded scrap at $450 per gross ton. 

To compare the two, Steel Market Update divides the shredded scrap price by the iron ore price to calculate a ratio (Figure 6). A high ratio favors the integrated/BF producers, a lower ratio favors the minimill/EAF producers. At the current 2.73 ratio shown below, minimills continue to hold a more competitive cost advantage. This ratio hit an all-time low of 1.86 in August 2020 (within SMU’s 12-year limited data history).

Figure 7 shows how the price of hot rolled steel generally tracks with the price of shredded scrap. Shred rose by approximately $40 from February to March, down $38 over January figures. Hot rolled prices continue to rise each week, up $100 in the past month and up $290 since the start of the year; the SMU hot rolled average reached $1,300 per ton as of March 16.

Zinc and Aluminum

Zinc, used to make galvanized and other products, had steadily risen from March 2020 through December, mostly hovering between $1.20-$1.30 since then (Figure 8). The LME cash price per pound of zinc as of March 19 was $1.2830, up 55 percent from the March 23, 2020, low of $0.8236. The price of zinc factors into the coating extras charged by the mills for galvanized products. Many mills revised their coating extras upwards in December to reflect the higher zinc price. Aluminum prices, which factor into the price of Galvalume, have been trending upwards over the last few months and are at a multi-year high. Note that aluminum prices often have large swings and return to typical levels within a few days, as seen in the graphic below. The LME cash price per pound of aluminum was $1.0073 as of March 19, and has been around this level for the past few weeks.

By Brett Linton,

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