Price hike attempts by the Brazilian basic pig iron (BPI) suppliers have failed after one of the major producers signed a deal to the US at a lower level. This confirms that the BPI market remains a buyer’s market, even though costs have been on the rise in Brazil and the appreciation of the local currency has not favored exporters.
A deal for 50,000 mt of Brazilian BPI with 0.15 percent of phosphorus content was done at $393/mt FOB for March shipment late last week, meaning a drop from the mills’ targets at $400-405/mt FOB seen earlier in January and the previous deal done at close to $400/mt FOB. “It's the outcome of having only one sizeable market - the US - for Brazilian pig iron,” a source in Brazil said. A few sources said that the deal was done, but, with some financing expenses, the final price has been heard at a slightly higher level of $395-397/mt FOB.
This happened even though production of pig iron has been going down since December. “Production is low due to the rainy period and producers are losing money with high charcoal prices,” a producer said.
Also, the appreciation of the Brazilian currency has been unfavorable for producers, so some of them have had to leave the market. “After having reached 6.20 for most of December and January, the Brazilian currency has appreciated since last week and is now at 5.86,” a source said.
With the new Brazilian deal, import BPI prices in the US have settled at $418-435/mt CFR, down by $12/mt on the lower end of the range and $10/mt on the higher end over the past week. The abovementioned deal from Brazil is equivalent to $418-422/mt CFR, according to sources. The higher end of the range ($435/mt CFR) translates to the workable level for lower-phosphorus BPI, though supply has been limited recently.