Fresh BPI booking from Brazil to US marks steep drop in global market

Thursday, 05 August 2021 17:32:19 (GMT+3)   |   Istanbul
       

A booking done lately from Brazil to a major US steelmaker has ended the silence which had been prevailing in the global basic pig iron (BPI) market since the beginning of July. Although the transaction has shattered sentiments among global BPI suppliers, most market insiders are convinced that “it would still have happened sooner or latter” taking into account the absence of resilient demand from the main BPI buyers and, concurrently, the recent weakening of market fundamentals in the global steel market.

According to market sources, a 55,000 mt cargo of ex-Brazil BPI for October shipment was traded to a major US steelmaker at $585-590/mt CFR Port of New Orleans, thus reducing the price in the US market by $35-40/mt compared to the price level fixed in the previous deal. The information has not been confirmed by the buyer or seller by the time of publication, but it is widely considered by market players to be trustworthy. Taking into account the freight reportedly at $40/mt, the FOB price is estimated at $540-545/mt FOB Black Sea. This is $75-80/mt below the price voiced by a supplier in negotiations during July. “There is a huge reduction within the past month indeed. But I expect the price in the next booking to be even lower,” an international trader commented.

Following the abovementioned deal, another trader stated that he expects the tradable level for ex-CIS BPI to be not higher than $570-580/mt FOB Black Sea, though the key CIS-based producers have been not active in offering lately. Earlier, CIS-based BPI sellers were aiming to get $605-610/mt FOB Black Sea.

Meanwhile, BPI imports in China have remained unattractive, with most bids hardly reaching $570-575/mt CFR. “Even with FOB prices from CIS-based suppliers at their lowest, it does not work with the freight rates today. It is hard work to make money,” a key Asia-based trader stated. “The Chinese price should be at around $540-550/mt CFR for pig iron. It is unreasonable to trade raw materials in China now,” another key trader said.

Meantime, BPI trading in Europe has slowed down with the approaching holiday season. “There is so much material ‘on the water’. But, with such a significant drop in prices, I do not exclude the cancellations,” a European trader commented.


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