Sentiments in the global basic pig iron (BPI) market have remained bearish this week even despite the announcement on September 21 by the Russian authorities of the introduction of a new export tax on a number of products, including pig iron.
In the benchmark US import BPI market, trading has been halted due to the offer/bid mismatch. While Brazilian suppliers have been asking for $400-408/mt FOB, similar to the previous deals, bids from some mills in the US have fallen to $400/mt CFR, translating to as low as $370/mt FOB. “I don’t think the market is that low, but US mills are definitely seeking levels below $400/mt FOB,” a trader said.
At the same time, market attention has been focused on the situation in the Black Sea region as Russia has announced the new export tax for steel and raw materials at seven percent at the current exchange rate. Some offers for ex-Russia BPI are still reported at $380/mt FOB, though the tradable level has remained much lower. The SteelOrbis reference price for ex-Black Sea BPI has settled at $340-355/mt FOB with an increase of only $5/mt over the week, since some volumes of the material could be sold at slightly higher prices in the Far East.
“The market has not changed in terms of prices [after the tax announcement] except for the hike in exports costs. I am afraid that Russia’s share in the Far East will be reduced[JF1] by the regional suppliers,” a market source said.
In India, offers for ex-Russia BPI have been heard at $425-430/mt CFR, translating to $370-375/mt FOB Black Sea, but the two last deals were disclosed at $408-410/mt CFR last week. However, a number of sources said that, by the end of this week, it has already been hard to find bids at above $400/mt CFR, which translates to only $345/mt FOB.
“I do not think the market will accept any increases. The market is the market and Russian mills will have to decide whether they‘d like to sell or not. There’s hardly any demand out there, so it will simply be a question of who is able and willing to sell at the lowest numbers,” an international trader said.
The reference price for imported BPI in Italy has remained at $370-375/mt CFR, so $340-345/mt FOB.