Insight

Will vertical integration in the steel industry reach new heights?

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Report summary

Steel producers have pursued a greater level of vertical integration in recent years, as market volatility and raw materials prices rose between 2009 and 2011. Now, with margins in the steel industry suffering, the cost of increasing vertical integration through captive, wholly owned mining assets is too high for many cash strapped steel producers. However, we expect steel companies will continue to look for ways to secure raw materials longer term.

Table of contents

  • Why has vertical integration into mining assets increased in recent years?
  • The effect of vertical integration on cost competitiveness
  • The future for vertical integration
  • Appendix

Tables and charts

This report includes 12 images and tables including:

Tables

  • Analysis of captive raw materials by company in 2013
  • Steel assets considered in this insight
  • Selection of captive mines wholly owned by steelmakers
  • Selection of mining equity shares of steel makers

Images

  • Steel & Raw materials prices indexed - 2000 = 100
  • 2013 Steel Cost Service iron cost curve by company
  • Percentage self-sufficiency against cost of iron production - 2013
  • Percentage self-sufficiency against cost of iron production - 2015
  • Average delivered annual cost per tonne of iron ore vs 62% Fe fines FOB western Australia
  • Average delivered annual cost per tonne of iron ore vs benchmark 62% Fe fines FOB western Australia
  • Average delivered annual cost per tonne of coal vs US Low Vol HCC FOB
  • Average delivered annual cost per tonne of coal vs benchmark QLD Australia FOB HCC benchmark

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