Despite unprecedented sanctions due to Russia’s invasion of Ukraine, basic pig iron (BPI) producers based in Russia and Ukraine's Donbas region have remained highly active in negotiations with Turkish and Chinese customers, and likewise with European companies, which are ready to accept sanctions-related risks. The suppliers in question have to be highly flexible and accept a lower price in every new deal, and this is exerting negative pressure on the positions of other global suppliers, those in Brazil and India above all.
Accordingly, this week a small-size lot produced by Ukrainian mill Alchevsk Metallurgical Complex (AMZ), located on the territory temporarily occupied by Russia, was sold to Turkey at $435/mt CFR, down $20/mt compared to the levels in previous deals. Afterwards, bids from the Turkish customers decreased to $420/mt CFR, with the supplier hesitating to sell below $430/mt CFR.
Although European companies are considered to be among those who prefer currently not to do any business with Russian companies, there are a few traders in Europe who have decided to maintain cooperation with Russia disregarding trade restrictions, with the pretext that BPI is not among the sanctioned products. Specifically, in Italy ex-NLMK BPI offers have been heard at $530/mt CFR Marghera, while ex-Donbas BPI is said to be available at $520/mt CFR. However, the information with regard to transactions has remained limited due to obvious reasons.
The continuing activity of Russia-based and Donbass-based BPI suppliers has exerted negative pressure on the positions of other global suppliers. As SteelOrbis reported earlier, a Brazilian BPI supplier has been forced to accept much lower prices in the latest sale to the US. A 60,000 mt cargo of ex-Brazil BPI with 0.15 percent phosphorus content, for August 10-20 laycan, was sold to the US at $592/mt FOB, down more than $200/mt compared to the levels targeted by a supplier earlier. “The latest ex-CIS BPI deals to Turkey are crazy. Seriously crazy,” an Indian source stated. Given the recent developments, major Indian pig iron mill Vedanta Ltd has decided to suspend operations at the second of its blast furnaces.
Meanwhile, widespread BPI offers in the eastern regions in India have remained unchanged, at INR 44,000 ($563/mt) ex-works, though some suppliers are ready to accept INR 43,000/mt ($551/mt) ex-works. “Demand is good at these price levels but I think pressure will build up considering the global market outlook,” an Indian trader commented.