Russian basic pig iron (BPI) producers, especially under the Western sanctions, have been facing extremely low demand globally lately, as uncertain situation in Turkey has been keeping buyers away from pig iron purchases and the Asian market has been very weak in terms of both prices and buying activity. As a result, one of the major Russian mills had to drop prices to conclude deal with the Middle East buyer.
A tender of ex-UAE pipe producer for 30,000 mt of pig iron was closed at $445/mt CFR Abu Dhabi in early May, according to a number of market sources. With the freight at around $55/mt, the price translates to $390/mt FOB. However, almost all market participants agree that “the material from this Russian mill is not standard basic pig iron, it is low manganese and low sulphur, with usually at least $15/mt extras,” a Turkey-based source told SteelOrbis. This means that the price in this deal translates to $370-375/mt FOB for basic pig iron.
In comparison, an offer from at least one supplier, who took part in this tender, was not below $490/mt CFR.
Official offers from Russia have been still reported at $400/mt FOB, stable from last week after declines seen a few weeks in a row. But the low-priced deal to the UAE is signalling that demand for pig iron from sanctioned Russian mills has been falling and the options have become very limited. Even this contract to the UAE has been assessed as “surprising” by most market sources. The buyer “has assets in the US and in the EU and still buying an OFAC, EU, UN-sanctioned origin,” a Europe-based trader said. The US and the EU have announced sanctioned on most Russian steel and raw material producers, except for a few ones, after Russia started the large-scaled military aggression against Ukraine on February 24, 2022. The UAE was not applying any direct sanctions on Russian mills, though still such trading is said to be “dangerous” in light of expectations that in the next packages the EU will target third parties, bypassing already imposed sanctions.
The latest offers for ex-Donbass BPI have been reported at around $380/mt FOB or $410/mt CFR Turkey, but a number of market sources agree that the real price indication in negotiations is at $365-370/mt FOB. “But there are simply no negotiations,” a source said.
