Asian Metal visits Wogen

Gareth Taylor, steel raw material analyst with Asian Metal, visited Nick Cartwright, trader with Wogen on Friday 12th April 2013 at the Wogen head office in London.

Nick explained that he was focussing his attention on sourcing suitable Turkish iron ore miners for their long term Chinese consumer. He noted the difficulties in securing a strong long term partner in Turkey as most mines had limited capacity and inconsistent grades. After finding suitable miners their remains the issue with pricing as a discount formula to account for the variation in specification in comparison to global index pricing. The global price for iron ore is in decline, and the current steep backwardation curve of the iron ore market was proving a major problem when concluding contracts. The transport time from Turkey to China meant that consumers prefer to pay at the market price when the iron ore arrived at their destination port, which needed to be included in the contract at the outset, while suppliers preferred to arrange contract prices at the departure port.

Secondary raw materials for steel foundries were also discussed, including EAF dust and mill scale. EAF dust is a by product of Eclectic Arc Furnaces and is considered a hazardous substance because of its unstable nature. There are varying grades of nickel in EAF dust that can be extracted using a number of different processes and is an investment opportunity in the Middle East and China. Mill scale is another scrap material produced by steel foundries that is in demand by Chinese consumers. Wogen is involved with the transportation of mill scale to Chinese consumers.