Following the successful sales of basic pig iron (BPI) at $580/mt FOB southern Brazillian ports at the beginning of the current week, a Brazilian supplier has not taken long to adjust its offers upwards. Moreover, towards the end of the week, the seller has managed to achieve a higher price in a new booking to the same destination.
Accordingly, following deals at $580/mt FOB southern ports, disclosed to the market early in the week, ex-Brazil BPI offers at once increased by $20/mt, reaching $600/mt FOB southern ports. Moreover, on April 6 SteelOrbis has learned of a new transaction at $595/mt FOB southern ports, for July shipment. The volume and the specification of the material have not been disclosed by the time of publication. According to market insiders, the sale was done to the customer based in Mexico, with a freight rate being assessed at about $35/mt. “The fast economic recovery and surging scrap prices appear likely to be causing a BPI stir in Mexico,” an international trader commented with regard to the abovementioned deals.
Despite strong bullish sentiments among all global BPI suppliers, some market players have continued to express doubts as to whether these levels are workable for the US, the main BPI import market. “BPI producers are talking higher prices, but I have yet to actually pay what they say. I think the market is closer to $580/mt CIF Port of New Orleans today, rather than to $580/mt FOB,” a US-based BPI buyer commented at the beginning of this week. “It is important to see a reaction from US-based buyers now. Concurrently, if China enters into purchase mode for pig iron, then we will really have interesting days in front of us,” an international trader reckoned. However, Chinese customers have continued to remain outside of the BPI market as for now. “Taking into account high margins due to high finished steel prices and, in particular, the lifting of the import duty, I expected China to resume BPI purchases. I still do not see why China is paying $700/mt CFR for billet, but only $560/mt CFR for BPI,” one of the leading international suppliers commented.
Meanwhile, CIS-based BPI suppliers have maintained a more cautious stance on current offers due to their expectations of higher price levels in the future. While some suppliers have withdrawn their offers at least until next week, others prefer to negotiate prices with customers individually, not disclosing price levels officially. Nevertheless, any business below $600/mt FOB Black Sea is unlikely to be done these days, market sources believe. “The global raw material markets have been getting really heated lately. The solid fundamentals are there,” an international trader commented with regard to the current developments.