Prices for basic pig iron (BPI) in the international market have started to soften this week after the lower-than-expected drop seen for busheling scrap in the US, the declining bids and demand in Europe, and the slowdown in the uptrend seen in the Far East earlier this month.
Though no new deals have been reported for ex-Brazil BPI, following sales at $408/mt FOB to the US and $413/mt FOB to Mexico, market sources all agree that in the new round of sales Brazilian suppliers will be lucky to get even $400/mt FOB. “Nothing has been done at lower levels yet, but the Brazilians have very limited options,” a European trader said. Busheling scrap prices have lost $50/gt this month, versus an expected drop of only $20/gt. “The scrap price has been confirmed. However, [Brazilian BPI] producers are reluctant to sell below $400/mt FOB. Otherwise, production will be reduced further,” another source said. With the freight of $30/mt, new sales to the US are expected at $430/mt CFR, versus $438/mt CFR in the previous deal.
The SteelOrbis reference price for ex-Black Sea BPI has reacted immediately to the worsening mood, coming down by $12.5/mt on average over the past week to $335-350/mt FOB. “There are rumors for a $370/mt FOB deal, but no one will pay this,” a trader said.
A deal for at least 20,000 mt of ex-Russia BPI has been heard at $370/mt CFR to Italy, translating to $340/mt FOB Black Sea at the highest. The tradable level is assessed at $370-375/mt CFR at the moment in Italy, while the previous deals were at $380-390/mt CFR. “Italy has full stocks of pig iron and flats, and the downward pressure will only increase,” a seller said.
There have been no new deals for ex-Russia BPI in the Far East with the latest tradable level for India still assessed at $410/mt CFR. Though the situation in the rebar and HRC markets in India is better compared to other countries, buyers were reluctant to accept the $420/mt CFR level offered by the seller earlier. Freight is around $50-60/mt to India from the Black Sea depending on the port of arrival.
Though allocation of pig iron from Russia may decrease in the coming months as one of the major mills - Tulachermet - is going to supply a part of the raw material to its newly purchased EAF mills in Russia, market sources are skeptical regarding whether this may help prices to remain stable or rise. “Demand is bad everywhere. If the US is falling, there are no changes for Black Sea [BPI suppliers],” a trader said. Moreover, “DMZ [one of the two major pig iron producers from Donbass] is going to restart operations and come back to the market within a few weeks,” another source said.