After October scrap prices in the US trended downward, US import pig iron offers from Brazil moved down $5-10/mt, while CIS pig iron offers have remained relatively stable after testing the market with higher offers. CIS offers for basic steelmaking grade are being heard at $235-245/mt FOB Black Sea while Brazilian offers for the same grade are being heard at $230-235/mt FOB Brazilian port.
Steelmakers’ buying interest in pig iron remains low domestically amid bearish outlook for the fourth quarter, but distributors may seize the opportunity to purchase inventory for 2017 delivery if floor pricing is sensed according to sources close to SteelOrbis.
The Southeastern US witnessed increased imports of pig iron in August and September due in part to a strong US dollar as well as attractive import pricing that effectively narrowed the spread relative to US scrap. Mills seized the opportunity to replace the use of scrap in their production processes with imported pig iron. This in turn decreased the demand for scrap, sending domestic scrap prices lower. In addition, the expectation among US mills for a robust recovery in the domestic demand for steel finished goods was not realized. As a result, the demand for steel raw materials has languished.
Domestic scrap prices have encountered heavy losses in the last two months at a rate of $20/mt for obsolete and $30/mt for prime per month. The decline in domestic scrap prices has decreased the appeal of imported pig iron despite the recent discounts. However, market sources suggest that favorable pricing in terms of imported pig iron may motivate distributors to store excess inventory, which can be sold domestically should scrap prices recover.