Coming up to the last days of March, it is observed that the global pig iron markets are continuing to experience troubled times, with global demand still weak and stocks at high levels.
In contrast with the international markets, some recovery has been observed in the Turkish pig iron market in the last week. With demand for finished products last week registering some recovery and with some rebound seen in prices as well, steelmakers (whose stocks have been decreasing) have turned their attention to purchases. Compared to the latest scrap deals, the pig iron price range has seemed advantageous, and so the producers have returned to the market with renewed demand for pig iron.
In the last week Ukrainian BPI producers were offering to the export markets in the range of $200-210/mt FOB. A Turkish producer concluded a deal for ex-Ukraine BPI in the last week at $229/mt C&F Turkey for April loading.
Meanwhile, Russian pig iron producers have turned their attention to the Turkish market as this market's producers are in the search for raw materials. In recent weeks, as a Russian pig iron producer monitored the international markets and declined to decrease its prices instantly, price levels of $230-235/mt FOB were being mentioned. However, prices below the abovementioned range were reached in the last week. In the same time period, with some producers with decreasing stocks seeking some relief, an ex-Russia deal has been concluded by another Turkish producer at slightly below the abovementioned level of $230/mt C&F for April shipment. However, since this movement in Turkey is totally related to finished steel demand, some producers prefer to behave more carefully and are focusing on finished steel demand.
As the US market has tightened significantly and as the price ideas of Chinese traders are at low levels ($240-250/mt C&F), it is observed that the Brazilian producers are having difficulties in doing business with the Far East and US. While working at only fifteen percent capacity in south Brazil, Brazilian pig iron producers' export offers were at the level of $210/mt FOB south Brazil as of the end of last week. It is thought that China does not favor buying unless prices go down, due to its purchase activities in Brazil, the CIS and Australia in recent weeks. On the other hand, since Indian producers' export tenders have been higher than the general global levels, they have been focused on local market. Thus, it is expected that they will be absent from the international markets until mid-April.
On the foundries' side, foundries in Europe (operating at 30-40 percent capacity) are observed to be considering delaying their purchase given that raw material prices may go down further. It is also observed that some foundries working with the automotives industry are in touch with traders for raw material purchases in Germany and France in particular, thanks to the partial bounce seen as a result of the official adjustments for the automotive industries in these countries. Meanwhile, foundries working with the cement and steel industries are in a better position compared to the automotive and agricultural machinery sectors. Thanks to the Turkish government's tax cut aimed at accelerating automotive sales, Turkish foundries working with the automotive industry have gained some hope for April. Linked to this, some foundries in Turkey working for the automotive subsidiary industry have continued to buy raw materials from the local market.
As mentioned in our previous analyses, the crucial factor for the future of the pig iron markets will be the outcome of the annual raw material contract negotiations. Since the degree of the anticipated reduction in the annual contracts is not yet clear, pig iron producers prefer in general to monitor the current mood of the market and maintain a wait-and-see approach in the current market situation, i.e. where demand is not constant and prices are unstable.