Prices for ex-Russia basic pig iron (BPI) have increased further in the past week, following stronger scrap prices in Turkey. But trading has remained limited as major mills have still been suffering from high stocks, while the overall outlook for the pig iron market is not so bright.
The SteelOrbis reference price for ex-Russia BPI has settled at $315-330/mt FOB, with the midpoint at $322.5/mt FOB Black Sea, up by $9/mt on average from last week.
This week, deal prices for import HMS scrap in Turkey (for US origin, in particular) have added $7/mt to $347/mt CFR, and, even though some market sources believe that the scrap market has limited space to rise further, this has supported BPI prices at the moment. Turkish buyers have been ready to pay up to $330/mt FOB for small volumes of Russian BPI of up to 5,000 mt, which translates to $350/mt CFR Turkey. No new deals have been heard so far. Officially the major Russian mill has held its offer at $350/mt FOB, but for large volumes at least one other mill has been ready to give lower prices at around $315-320/mt FOB or $335-340/mt CFR Turkey.
“I see that mills want to achieve $340/mt FOB at least at the current exchange rate, but we are not there yet,” a trading source said.
High grade low-manganese and low-sulphur Russian BPI has been on offer at $380/mt FOB, but the tradable level is also at least $10/mt lower.
One of the major downside risks for the Russian BPI market is the high unsold allocation. “I see that in the first half of May the major mill transported only 5,000 mt by rail to the port [of Novorossiysk]. Usually, they have 60,000-75,000 mt transported in two weeks. It looks like they either significantly reduced production or are storing the volume at their plant,” a market source said. There has been no confirmation of large pig iron production cuts at major mills, but producers said that they see lower steel production planned for the summer months, which means that, if nothing changes, the pressure on pig iron prices will increase.