The bookings for both ex-Brazil and ex-Russia basic pig iron (BPI) done to the US recently have attracted a lot of attention among market insiders. Though neither the customer nor the suppliers have confirmed the deals by the time of publication, the deals are considered to have actually been done, but reportedly with certain specific conditions.
Accordingly, following quite a long lull in the US spot market, the leading steelmaker had returned to the negotiations with global BPI suppliers with at least four cargoes ultimately booked by the middle of the current week. In particular, two cargoes of ex-Brazil BPI, for December and January shipment, changed hands at $550/mt CFR Port of New Orleans. With the freight rate assessed at $50/mt, the FOB price is estimated at $500/mt FOB at the highest. The level is nearly the same as the price fixed in the previous booking to the US in the second half of October, although the seller was targeting $510/mt FOB. Notwithstanding the claims of Brazil-based BPI suppliers that they were sold out until the end of 2021 long ago, according to market insiders, even after the latest trade, they still have material for December shipment on their hands.
Meanwhile, two lots of ex-Russia BPI, for December shipment, have reportedly been done at $568/mt CFR and $580/mt CFR, respectively. Taking into consideration the bids voiced by US customers before the information about abovementioned deals has leaked to the market and the ex-Brazil BPI transaction, all market players consider the prices for ex-Russia BPI to be overvalued. “Given that it is not the first transaction done to the US market by this mill, it can be said that the mill has joined the ranks of major pig iron suppliers. Obviously, they are aiming to strengthen their business there. The bookings were certainly done, though with some specific issues having been kept in mind for future cooperation,” one international trader commented. It is noteworthy that other Russia-based BPI suppliers have opted to delay new bookings, counting on the cancellation of the export duty from January 1, 2022. “The producer may carry a premium due to lower phosphorus content but the price still seems high,” another international trader commented. Taking into account the average freight rate at $50/mt from the Black Sea region to the US at $50/mt, the FOB Black Sea price is estimated at $520-530/mt FOB. However, some sources report that the freight rates appear to be adjusting down a bit lately.
Meanwhile, Ukraine-based BPI suppliers have maintained their focus on sales to distributors, who are forced to accept higher prices because of smaller-sized lots and the higher quality of material. In particular, a few bookings have been done for BPI with low manganese content at $585/mt CFR, for distribution to Europe and Turkey. Taking into account the freight from Black Sea, the FOB prices are assessed at $545-555/mt FOB Black Sea. Previously, deals have been fixed at $530-540/mt FOB Black Sea in the middle of October, for material produced by the second-tier Ukraine-based BPI mill. “There is almost no low-Mn BPI available, hence we have no other choice but to accept these levels,” a major trader stated. However, some market insiders believe that the traders are in the market aiming to renew their positions, but not because of demand from steelmakers, at least in Turkey. “Both domestic and export rebar prices in Turkey would not justify high BPI prices. Moreover, the outlook remains sluggish, with weak demand and the devaluation of the Turkish lira. The scrap uptick is simply because mills are covering their imminent needs for December,” the trader stated. “I have doubts that Turkey is going to accept the price $585/mt CFR currently. There is so much material in the hands of traders, which was booked at lower numbers. Hence, I believe they [Turkish customers] will consider maximum $565-570/mt CFR levels in the coming deals unless it is the biggest customer in Turkey, which is ready to pay a higher price for premium quality,” a trader stated. There has been talk in the market about distressed cargoes of ex-Brazil BPI coming to Turkey at $540-545/mt CFR, however the information has not been confirmed by the time of publication.