Activity in the Russian basic pig iron (BPI) market has been cut to a minimum as tradable prices in the main sales destination - Turkey - have been under pressure from falling scrap prices. A few major sellers are entirely out of the market due to the low prices.
The SteelOrbis reference price for ex-Russia BPI has lost another $7.5/mt over the past week, to $325-330/mt FOB Black Sea, with the midpoint at $328.5/mt FOB.
In Turkey, after scrap prices fell by $8.5/mt on average this week to $335-348/mt CFR, buyers have been targeting $340-345/mt CFR for basic pig iron. This price translates to $320-325/mt FOB Black Sea. But no deals have been reported over the past week, mostly as exporters have not been interested in selling at such low levels. This price is for relatively large volumes, while for smaller volumes levels $5/mt higher are possible, but still demand has been very weak. “Usually, the automotive industry has been purchasing 30-40 percent of foundries’ production. Turkish foundries shipped a lot to Europe. And now all manufacturers are waiting for clarification on sanctions, for finished products - will the duty be 10 percent or 25 percent, for which countries, etc. In addition, the euro exchange rate has risen to 1.137. So, export to the US is categorically unprofitable. It is easier not to produce these volumes… Therefore, foundries have also stopped receiving orders and buying pig iron and scrap,” a trading source commented.
In other markets, the situation has also been tough. One seller has been in negotiations with India, but no price information has been available and market sources believe that $340/mt CFR would be the best price to this destination, translating to not much above $300/mt on FOB Black Sea basis.
Also, additional pressure on prices is coming from the high stocks at the major port of Novorossiysk, with one leading mill having stocked 150,000 mt of pig iron there, according to market sources.
Moreover, this week, the ruble has appreciated again - to $1=RUB 81-83 from $1=RUB 84-86 a week ago. This has made exports even more unfavorable. “Previously, there was a hope that this would be temporary. By the time you bring material to the port and get payment, the exchange rate may go up. But now everyone has realized that it is not clear how long the current currency fluctuations will last. So, sellers began to slow down production,” a source said.