MMi Daily Iron Ore Report (november 5)

Nippon Steel has successfully produced over 100 million tonnes of Direct Reduced Iron (DRI) using 100% hydrogen as the reducing agent in a pilot-scale shaft furnace. The test involved more than 300 hours of continuous operation using lower-grade iron ore, marking progress towards commercialising hydrogen-based ironmaking technology. The company plans to continue testing and develop scale-up technologies from FY2027 with the aim of establishing the technology by around 2040. The development is relevant for India's steel sector as hydrogen-based DRI technology could help reduce carbon emissions from ironmaking and improve the use of lower-grade iron ore, supporting the industry's long-term green steel transition.

US metallurgical coal producer Warrior Met Coal reported third-quarter fiscal 2026 net income of $49 million, up 32% YoY from $37 million a year earlier. Total revenue rose 54% YoY to $508 million, mainly driven by a 48% YoY increase in sales volumes to 3.5 million short tons as the Blue Creek mine ramped up ahead of schedule. Adjusted EBITDA rose 76% YoY to $124 million, with margin expanding to 24% from 22%. Average net selling price was $144 per short ton, up 6% YoY, while cash costs rose 4% YoY to $105 per short ton. High Vol A coal accounted for 68% of sales volumes, up 25 percentage points YoY. Mine 7 output fell 22% QoQ due to difficult geological conditions and a longwall move, adding about $11 per ton to overall cash costs. The PLV FOB Australia index averaged $225 per short ton in the quarter, up $9 QoQ. Gross price realization fell to 66% from 83% a year earlier, attributed to freight and demurrage rates that were 22% and 44% higher YoY respectively, and to a one-time monetization of surplus inventories at fixed prices, which generated $49 million in cash but reduced adjusted EBITDA by about $27 million versus index-linked pricing. The board declared a $2 per share special dividend. Liquidity rose to $578 million, and free cash flow after capital expenditure was $139 million. The company reaffirmed its full-year guidance; a decision on expanding Blue Creek's second longwall depends on market absorption capacity. Demurrage and freight costs are expected to remain elevated through year-end. [SMM Iron Ore]