Raw materials

      While prices for the key raw materials used in the production of steel were already subject to highly volatile developments in previous business years, some of the price fluctuations on the international spot markets in the business year 2021/22 were downright erratic. Trends that saw key input materials for the steel industry moving against each other also intensified during the reporting period. This is because raw materials prices were not just affected on the demand side but, in particular, were also exposed to considerable fluctuations on the supply side. For example, in the reporting period both mining and logistics were hampered by torrential rain–in Brazil in January 2022 and on the East Coast of Australia in March 2022–and the ramifications of the COVID-19 pandemic, among other things. In the fourth business quarter, the outbreak of the Ukraine war reduced the global availability of raw materials pivotal to steelmaking. This is because the areas in both Ukraine and Russia affected by the crisis are home to significant quantities of iron ore, coking coal, and certain types of alloys. Substantial increases in the costs of transportation and logistics resulting directly from COVID-19 contributed to the high cost of raw materials on the international spot markets during the business year 2021/22. The developments in Russia and Ukraine also played a dominant role in the price of energy. Natural gas prices in Europe surged as early as in the fall of calendar year 2021 due to reduced deliveries. The start of the war in Ukraine dramatically intensified this dynamic yet further. Subsequently, the increases in the price of natural gas directly affected the trajectory of electricity prices.

      Iron Ore

      Historically, at about USD 165 per ton (CFR China), the spot market price of iron ore was already high at the start of the business year 2021/22. In China, by far the world’s largest steel producer by volume, infrastructure projects as well as the real estate sector drove the demand for iron ore. Extensive work to expand mining capacity in Australia, the world’s largest producer of iron ore, was carried out over many years but had started to subside in recent years. Since the January 2019 dam burst in an iron ore mine in the Brazilian state of Minas Gerais, moreover, not all of Brazil’s mining capacity has returned to the market. The global balance of iron ore supply and demand is out of sync due not only to the global steel industry’s robust rebound, but also and in particular due to the record volume of steel production in China during the first half of calendar year 2021. The record-breaking run of spot market prices continued unabated until July 2021, culminating in an all-time high of USD 220 per ton. This was the first time ever that the price of iron ore breached USD 200. In subsequent months, however, the price collapsed by almost 60% to about USD 90 per ton. This was triggered by politically motivated steps that the Chinese government took to counteract an overheating of the raw materials markets and to put in place processes aimed at regulating air pollution. Cutbacks in China’s infrastructure projects led very quickly to cutbacks in steel production and to a commensurate decline in demand for iron ore. The price trend did not reverse until iron ore inventories were built up again toward the end of calendar year 2021 in anticipation of the Chinese New Year and the Winter Olympics. Inclement weather in Brazil in January 2022 also contributed to the sustained upward momentum in prices. Subsequently, prices remained high, especially in light of the Ukraine war and the resulting reduction in iron ore supplies. Toward the end of the business year 2021/22, the price of iron ore finally settled around USD 150 per ton.

      Coking coal

      Just as in previous business years, in the reporting period supply side developments largely determined the movement of coking coal prices in the international spot markets. But fluctuations in the price of metallurgical coal were very different from those affecting iron ore. For example, at about USD 115 per ton (FOB Australia), the price of high-grade coking coal at the start of the business year 2021/22 moved laterally at a very low level despite the strong momentum in China’s steel sector. First signs of an upward trend in prices made themselves felt as early as in June 2021, with the trend intensifying significantly over the Northern summer. At the end of September 2021, i.e., right at the moment when the demand for steel in China began to subside, the price of coking coal was at an all-time high of just over USD 400 per ton. There are many causes for this development. China has been cutting back on coal mining in recent years for environmental reasons. During the first half of the business year 2021/22, floods and accidents in the country’s coal mines along with COVID-19-induced closures of its border with Mongolia (which by now has become China’s most important source of metallurgical coal) led to a supply shock. Furthermore, the political tensions between Australia and China have led to a redirecting of the international flow of goods, in this case metallurgical coal. While China is now turning increasingly to U.S. coal mines in addition to those in Mongolia, numerous Asian and European steel manufacturers are increasingly turning to major Australian coal mines to cover their need for coal. The cost of coking coal remained very high in the reporting period’s second half as well, finally reaching an all-time high of USD 660 per ton in mid-March 2022 due to the Ukraine war. Aside from the greater difficulty in obtaining Russian coal, torrential rain on Australia’s East Coast further limited supplies in an already tight market. The price of coking coal fell a bit toward the end of the business year 2021/22, finally settling at about USD 560 per ton.

      Steel scrap

      High-quality scrap is used in blast furnace-based steelmaking to supplement pig iron, and it is the main input material in electric arc-based steel production. While the steel industry in Europe ramped up its capacities yet again at the start of calendar year 2021, the production output of the European automakers—a key supplier of high-quality scrap—remained low on account of supply chain problems. The price of steel scrap rose sharply in the fourth quarter of the business year 2020/21, with the upward trend continuing unabated at the start of the business year 2021/22. However, the volatility in the price of steel scrap during the reporting period was not as pronounced as it was in connection with iron ore and coking coal. Specifically, the price of steel scrap (CFR Turkey) was about USD 430 per ton in April 2021. It rose to about USD 470 per ton by July 2021 and then fluctuated between USD 440 and USD 500 per ton through the end of calendar year 2021. Prices did not shoot up sharply on fears of inadequate supplies until the outbreak of the Ukraine war. At the close of the business year 2021/22, steel scrap was selling for about USD 660 per ton.


      Alloys are a key cost factor in the High Performance Metals Division. They are used in steel production alongside pig iron and scrap to manufacture highest-quality steel grades. The price of nickel on the London Metal Exchange (LME) jumped by about one third in the first three quarters of the business year 2021/22—despite slightly lower volatility than in recent years—from about USD 16,000 per ton to about USD 20,900 per ton. This alloy, which is most important to the High Performance Metals Division, saw not only massive price surges in the reporting period’s fourth quarter, especially due to the outbreak of the Ukraine war, but also trading disruptions that lasted several days. Following the invasion of Ukraine, planned sanctions against Russia, one of the world’s largest nickel producers, further fueled prices on the LME. In early March 2022, fears of supply chain bottlenecks led to all-time high closing prices of just under USD 43,000 per ton. The markets calmed down a bit only after trading was suspended for a few days. Subsequently, the price of nickel fell slightly, finally settling at just under USD 33,400 per ton toward the close of the business year 2021/22. The war in Ukraine has also adversely affected supplies of other alloys, such as ferrovanadium and ferrotitanium, and contributed to erratic price movements in the fourth business quarter. The energy-intensive mining of ferrochromium has become more expensive owing to the significant increases in energy costs during the reporting period’s second half.


      The price of natural gas in Europe climbed to historic highs in consequence of the Ukraine war, breaching EUR 200 per MWh (Spotmarket THE Settlement, Germany) for the first time. Fears of cutbacks in natural gas deliveries or even a complete suspension of deliveries have led to absolute all-time highs. However, the initial increases in European natural gas prices already occurred back in the Northern summer of 2021. This was caused by the expanding economic activity simultaneously with both reductions in gas deliveries and rising CO2 emission allowance prices. The throttling of natural gas deliveries from Russia stems from the tensions surrounding the start-up of the Nord Stream 2 pipeline. Against this backdrop, the price exceeded all-time highs of EUR 175 per MWh toward the end of calendar year 2021. By contrast, it was still less than EUR 25 per MWh at the start of the business year 2021/22. The price of electrical energy on European electricity exchanges rose more or less in lockstep with the price of natural gas. Electricity prices are determined by the marginal cost of the most expensive type of electricity produced; as a result, the price trajectory of natural gas materially determined the price of electrical energy during the reporting period. While the procurement price of electricity at the start of the business year 2021/22 hovered around EUR 50 per MWh (Spotmarket EXAA AT Base), it had risen many times over to about EUR 270 per MWh by the close of the third business quarter. Toward the end of the reporting period, prices were just under EUR 300 per MWh.

      The degree of fluctuation in stock prices and currency exchange rates or in prices of consumer goods in comparison to the market.