Prices for ex-Brazil basic pig iron (BPI) have continued to move up this week and the major reason for this has been a shortage of the material in the market. Even though US buyers are not very active, the allocation really seems reduced, pushing prices closer to $500/mt FOB.
A number of market sources have been discussing a new deal for 50,000-55,000 mt of Brazilian BPI with 0.15 percent of phosphorus content at $530/mt CFR, done late this week for July shipment to the US market. This is a significant increase compared to the previous deals at $510-515/mt CFR for this grade reported as done in early May. The freight from South Brazil to the US is assessed at $30/mt, so the deal price level translates to around $495-500/mt FOB. Most market sources confirmed that the deal happened and “after this we are asking $500/mt FOB for end July shipment. There is no material in the market,” one of Brazilian suppliers commented.
Also, some smaller volume purchases were done in Brazil at an equivalent $495/mt FOB. But some market sources doubt that US buyers will easily accept $530/mt CFR for the next round of deals. “It is the offer level, yes, but it is hard to understand if the US will pay this price for the rest of July shipment allocations left in the market,” another Brazilian source said.
The SteelOrbis reference price for ex-Brazil BPI has been settled at $490-500/mt FOB, moving up by $10/mt over the week. “There is a shortage of wood for charcoal production in Brazil. Many charcoal plants are dormant with no prospect of recovery,” a source commented on the reason for the uptrend.
In addition, the supply from Ukraine has been constrained from both of the major mills, suffered by the Russian attacks on Ukraine. Market sources agree that it does not mean that mills are fully stopped or will not perform, but definitely allocation is limited and it will be hard to increase it soon.
As for the European market, higher prices from Brazil have scared buyers and there have been no deals reported over the past week. “We still think $510/mt CFR is the right price here,” a Europe-based source said. Some offers have been at $525/mt CFR early this week, but they have increased up to $540/mt CFR or even above by now.
