Prices for ex-Russia basic pig iron (BPI) have continued to move up gradually this week even though trading has been limited at the major destinations and scrap prices have stabilized. But the major attention of the market sources has been at the awaited 12th package of the European Union after introduction of the ex-Russia pig iron ban by the UK on December 15.
The UK government has announced its seventh trade sanctions package against Russia due to its large-scale military invasion of Ukraine, imposing import ban on pig iron, ferroalloys, ferrous products obtained by direct reduction of iron ore and other spongy ferrous products, ferrous waste and scrap. “It seems [the European Commission] might announce their sanctions tonight,” a trader said. Talks about ban for Russian pig iron and iron ore in the 12th package of the sanctions by the EU have intensified this week. “Anything can happen, we are just waiting,” a Russian supplier said. A few market sources agree that the possibility of the inclusion of pig iron in 12th package is higher now even though it is a key raw material for steel mills as the market is waiting for approval of extension of quotas for ex-NLMK slabs in Europe by 4 years. Also, market sources said that even if the sanctions will be introduced in the short term, there will be at least half a year of grace period.
However, as of late Friday, there has been no information about including pig iron in the 12th package of sanctions, which has been adopted by the European Union countries late in the week. Only ban on Russian diamond imports have been reported so far, to be effective from January 1.
The SteelOrbis reference price for ex-Black Sea BPI has increased by $5/mt from the lower end to $375-390/mt FOB. Some small volume sales have been reported at near $385/mt FOB and though the sales destination has remained unconfirmed by the time of publication, the market sources believe it was for Turkey.
The major Russian mill has hiked offers to $400/mt FOB Black Sea, as with intensified talks about ban for imports from Russia, European mills will obviously need to switch to other origins like Brazil or Ukraine, which are higher priced. But “the steel mills [in Italy] have their own logic, bidding lower as they understand that Russia will need to book as many tonnages as it can, before one of the markets is closed,” a source said. The last deals for ex-Russia BPI were at $395/mt CFR as the highest, translating to $365/mt FOB.
