A relatively long silence in the global basic pig iron (BPI) market has been disrupted by the negotiations between one major US steel mill and a few global BPI suppliers, though these have no results for a long time due to the strong divergence of interests between the sellers and the customer.
According to market sources, at the start of the negotiations most suppliers voiced their target prices at $540-550/mt CFR Port of New Orleans, which was considered by the buyer to be absolutely unworkable in accordance with the recent development of the situation in the scrap market in particular. “The price level is actually more like $500/mt CIF US,” a US-based source stated earlier this week. By the middle of the current week, one Brazil-based supplier finally managed to conclude a deal for 35,000 mt of BPI with 0.15 phosphorus content, for March shipment, but, having been forced to lower its price to $510/mt CFR Port of New Orleans. It is noteworthy that the above-mentioned deal has left quite mixed sentiments among market participants. While most global suppliers have become discouraged by this development, international traders are deeply convinced that there was no chance for global suppliers to sell at their targeted prices even though the suppliers had remained bullish as possible over a long period. “Until very recently, some ex-CIS BPI offers have been voiced at $630/mt FOB Black Sea and sounded like a real shot in the dark. While billet prices have settled at $560-570/mt FOB. I can hardly believe in a BPI price higher than $490/mt FOB Black Sea,” an international trader commented.
Amid the above circumstances and taking into account the recent increase in freight rates, SteelOrbis’ assessment for ex-Brazil BPI prices has dropped at least to $490/mt FOB Brazil compared to $540/mt FOB fixed in a previous sale in late December.