The Steel Feedstock Index

The Steel Feedstock Index (SFI) is a creation of the Australian Steel News (ASN) newsletter and is not found elsewhere in the sector. Whilst it doesn´t show the actual cost of buying steel in the Australian marketplace, it does show the month-to-month change in the combined price of the ingredients proportionally used in the making of steel via the blast furnace (BOF) method. First, the following information is obtained:

Iron ore  –  62% Fe fines iron ore CFR China via SGX Group.

Coking coal  –  SGX Group TSI FOB Australia Premium coking coal futures.

Steel scrap  –  Platts TSI HMS ½ 80:20 CFR Turkey via London Metals Exchange

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