Iron ore, scrap, coal and coke are the main raw materials for steel production, accounting for over 80% of production costs, making procurement costs a key determinant of steelmakers' cost competitiveness and profitability. Procurement costs are largely driven by market prices, though individual mills face significant variations due to differences in location, purchasing methods, channels and timing.

In June, procurement costs for coal and coke rose sharply month on month, scrap costs were broadly stable, while costs for other raw materials generally declined over the same period, according to data from the China Steel Development Research Institute.

For January-June, procurement costs for major raw materials including coal, coke, iron ore, pig iron and scrap rose year on year, with the exception of alloys.

Coking coal

Weighted average procurement costs for coking coal on an air-dried basis stood at 1,500.94 yuan/t in June, up 6.42% month on month. For January-June, average costs were 1,389.08 yuan/t, up 8.72% year on year.

Among benchmarked mills, the five lowest-cost coking coal buyers posted weighted average procurement costs of 1,136.04 yuan/t on an air-dried basis in January-June, 18.22% below the industry average. The five highest-cost buyers paid 1,541.81 yuan/t, 11.00% above the average.

PCI coal

Weighted average procurement costs for PCI coal on an air-dried basis reached 1,114.62 yuan/t in June, up 8.77% month on month. January-June average costs were 1,000.42 yuan/t, up 4.53% year on year.

The five lowest-cost buyers paid 815.42 yuan/t in January-June, 18.49% below the industry average, while the five highest-cost buyers paid 1,164.61 yuan/t, 16.41% above the average.

Met coke

Weighted average procurement costs for metallurgical coke on an air-dried basis were 1,774.98 yuan/t in June, up 8.00% month on month. January-June average costs were 1,611.90 yuan/t, up 6.53% year on year.

The five lowest-cost buyers paid 1,426.98 yuan/t in January-June, 11.47% below the industry average, while the five highest-cost buyers paid 1,859.00 yuan/t, 15.33% above the average.

Domestic iron ore concentrate

Weighted average procurement costs for domestic iron ore concentrate were 768.33 yuan/t in June, down 3.48% month on month. January-June average costs were 794.22 yuan/t, up 2.66% year on year.

The costs, converted to 62% grade, averaged 778.18 yuan/t among benchmarked steel mills in Jan-Jun, with the five lowest-cost mills posting a weighted average of 621.91 yuan/t, 156.27 yuan/t or 20.08% below the group average. The five highest-cost mills saw weighted average procurement costs of 913.58 yuan/t, 135.40 yuan/t or