The extraordinary recent fall in steel scrap prices has permitted:
• EAF-based long product mills, including those in Turkey, to participate somewhat more effectively in the export market, although they are still at a sizable cost disadvantage versus integrated mills in China and Russia. If the steel scrap price had remained high, the Turkish mills would have been largely eliminated from a number of their traditional export markets due to an extreme lack of cost competitiveness.
• EAF-based sheet mills to regain cost competitiveness versus integrated steel mills. A number of the mills in Turkey, South Korea and Japan have shut down because of high costs and low prices. In the United States, the EAF-based sheet mills in 2014, although they had much higher costs than the average-cost integrated mill, reported good profits because of much higher price realizations than their offshore competitors.
For this group, the maximum recent cost disadvantage versus the average cost USA integrated mill was estimated at $119 per tonne in September 2014. The disadvantage in February 2015 was reduced to $37 per tonne.
| USA EAF-based Sheet Mill vs. Average Cost Integrated Mill | |||||
| (HRB operating cost per tonne) | |||||
| Sep 2014 | Jan 2015 | Feb 2015 | |||
| Blended EAF metallics cost | $461 | $407 | $328 | ||
| EAF-based sheet mill | $647 | $596 | $520 | ||
| Average cost integrated mill | $528 | $504 | $483 | ||
| EAF vs. Integrated | +119 | +92 | +37 | ||
| Source: WSD Estimates | |||||
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