Prices for ex-Brazil basic pig iron (BPI) have started to improve after the previous long-standing declines. Sellers have managed to sell some volumes to alternative destinations and, under less pressure from volumes, they have managed to resume negotiations with the US at slightly higher price levels.
The latest sale for ex-Brazil BPI with 0.15 percent phosphorus content has been reported at $390/mt FOB South Brazil, with the destination being the US. The CFR price has been assessed at $415/mt CFR, but some market sources believe it is closer to $420/mt CFR. “The rainy season has finally started, somewhat reducing offer volumes for the time being. I see this as the end of the downtrend,” a source from Brazil said.
One of the important reasons for the rebound is successful trading from Brazil to alternative destinations like Italy and Mexico. A deal for 50,000 mt of Brazilian BPI to Italy reported last week was finally confirmed at $378/mt FOB, slightly lower from the price of $380/mt FOB which circulated in the market last Friday. In addition, 30,000 mt of ex-Brazil BPI from another supplier was transacted at $415-417/mt CFR in Mexico. Due to the higher freight and some additional expenses, the net FOB-based price was assessed at $372/mt, but “I would say all deals done not to the US were close to $377-378/mt FOB as we should include financial expenses,” a trader said.
As a result, the SteelOrbis reference price for ex-Brazil BPI has settled at $377-390/mt FOB with the midpoint at $383.5/mt FOB, up by $3.5/mt from last week. But most market sources believe that this is because the previous deals must be included in the range, while in the next round of bookings prices are anticipated at $390-395/mt FOB.
Among additional reasons for the price increase in the BPI market is the settled stable trend in the local US scrap market, which is assessed as a positive sign after the decline by $10-20/gt seen in October.
Also, Venezuelan President Nicolás Maduro suspended the gas agreements with Trinidad and Tobago in late October. Following this move, an HBI plant in Trinidad and Tobago has been put into maintenance, cutting HBI supply to a major US steel producer.
The SteelOrbis reference price for import pig iron in the US has increased by $5/mt to $415-430/mt CFR.