Brazilian basic pig iron (BPI) suppliers have remained bullish, and some small increase has been fixed in deals to the US and Europe over the past two weeks. Sellers hope for further hikes, but this is questionable in the near future as buyers have started to resist.
Last week, a deal for 50,000-55,000 mt of Brazilian BPI with 0.15 percent phosphorus content was signed at $429/mt FOB to the main US buyer, which translated to $458/mt on CFR basis including financing. This is up from the previous transactions done to the US at $420-425/mt FOB in late January. This week, most market sources have been discussing a deal from Brazil, also to the US, at $435/mt FOB. “This would be the right price for today, but I can’t confirm that deal has been done,” a Brazil-based source said. “The last confirmed sale from my knowledge was at $430/mt FOB, but it is right that most large producers are looking for $435/mt FOB now,” an international trader said. Nevertheless, the seller confirmed that the deal did in fact take place this week and that it was for April shipment.
The tradable level for ex-Ukraine BPI in the US has been at $450-460/mt CFR, but sellers are not in a hurry to push volumes, having only April shipment. Some market sources have hopes that the market will reach $470/mt CFR, which can be attractive for Ukrainian customers, considering higher competition in Europe with Brazilian exporters due to CBAM.
Brazilian BPI exporters claim that prices are supported by strong demand and firm scrap prices, but the main large BPI buyers have started to resist discussions above $430-435/mt FOB, at least for now.
In Europe, some ex-Brazil BPI volumes are heard to have been sold at $465-470/mt CFR, which translates to around $430/mt FOB, according to market sources. Offers for Ukrainian pig iron are close to this and the workable level is assessed at $460-465/mt CFR. CBAM costs for Brazilian material are much less than those for Ukraine, so customers are interested in negotiations with Brazil. However, some offers from Brazil coming at as high as $480-485/mt CFR have been ignored by buyers and assessed as being too high for the current market.
“The correct market level in Europe is equivalent to a minimum of $435/mt FOB [from Brazil], but producers claim that they currently have problems with the rainy season and so they don`t promote intensively. But I think they are also speculating, trying to get better prices in a few weeks,” a source in Europe said.
