Australian Steel News

The STEEL FEEDSTOCK INDEX

& stainless steel FEEDSTOCK INDEX

The Steel Feedstock Index (SFI) and Stainless Steel Feedstock Index (SSFI) are creations of the Australian Steel News (ASN) newsletter. Both indices are extremely useful and are not found elsewhere in the sector. Whilst they don´t show the actual cost of buying steel or stainless steel in the Australian marketplace, they show the month to month change in the combined price of the ingredients proportionally used in the making of steel and stainless steel. The information used to calculate the indices is indicative, transparent and publicly available.

The Steel Feedstock Index (SFI) applies a formula combining the costs of the ingredients typically used in making one tonne of steel via the blast furnace (BOF) method. First, the following information is obtained:

Iron ore  -  Price per tonne in USD of Australian iron ore via NYMEX

Coking coal  -  Price per tonne of Australian coking coal via S&P Global Platts

Steel scrap  -  Price per tonne of Turkey scrap via London Metals Exchange

For the SFI calculation, we assume 1.6mt of iron ore plus 0.9mt of coking coal plus 0.15mt of scrap go into the steelmaking process. By combining the costs of these ingredients, we arrive at the Steel Feedstock Index expressed in USD.

The Stainless Steel Feedstock Index (SSFI) likewise applies a formula combining the costs of the ingredients typically used in making one tonne of 304 grade stainless steel via the electric arc furnace (EAF) method. First, the following information is obtained:

Iron ore  -  Price per tonne in USD of Australian iron ore via NYMEX

Chromium  -  Argus Metals International average of range price in USD per tonne

Nickel  -  Price per tonne in USD via London Metals Exchange

We assume the composition to be iron ore 70%, chromium 18% and nickel 8%. (The cost of the remaining 4% of ingredients is minimal). The prices for the main three ingredients are combined to give the SSFI which is expressed in USD and AUD terms.