China accepts higher price in ex-Russia BPI booking, concerns over tight supply rise

Thursday, 20 January 2022 16:26:13 (GMT+3)   |   Istanbul
       

With the ongoing surge in iron ore and coking coal prices, Chinese steelmakers have been quite active in negotiations with foreign basic pig iron (BPI) suppliers lately. However, buying activity has been constrained by the mismatch between offers and bids. Specifically, while Chinese customers have been seeking to pay $545-550/mt CFR, these levels have been workable neither for CIS-based and Brazil-based suppliers, nor for India-based BPI suppliers. Nevertheless, by the end of the current week, a 25,000 mt ex-Russia BPI cargo has been booked at $550/mt CFR, for March shipment.

Having an advantage with regard to logistics, the supplier has accepted the price, planning to ship the material from a Russian Far Eastern port. In early January, a booking for ex-India BPI to China was fixed at $537.5/mt CFR, as SteelOrbis reported. Meanwhile, CIS-based BPI suppliers shipping material from the Black Sea region appear to be hardly ready to accept prices below $510/mt FOB, with the freight to China being estimated at $50-60/mt for 40,000-50,000 mt cargoes. “There are no firm offers from the CIS. The recent levels at $500-510/mt FOB Black Sea seem to be low now, given where billet is,” a major international trader stated. “We expect prices to keep moving up further with a supply shortage being the main reason. According to our preliminary estimations, our volumes for March shipments are very scanty,” a representative of a Ukraine-based BPI mill commented.

Fears of a Russian invasion of Ukraine have tightened the BPI market further. Specifically, global market leaders assume prices for non-Russian BPI would rise considerably if the US administration imposes sanctions against Russia. However, BPI producers have declined to comment on any consequences of such a scenario.

Meanwhile, the Brazilian pig iron producers have been gradually restarting their operations after a week-long halt caused by rainfall in the southeastern state of Minas Gerais. Nevertheless, the sellers have opted to focus on the deliveries of material previously booked rather than on active offerings of fresh material. The latest booking for ex-Brazil BPI was fixed at $500/mt FOB, for March shipment, as SteelOrbis reported previously.

Being successful in trading domestically at INR 44,000-44,500/mt ($591-598/mt) ex-works, India-based BPI suppliers remain inactive in offerings to export destinations. “No one will accept Indian prices abroad,” a representative of an Indian mill stated.


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