The recent ex-Brazil basic pig iron (BPI) booking to the US done at the beginning of the current week has rippled across the global BPI market. While global BPI suppliers have recently stepped up efforts to get higher prices, seeking support from the uptrend in the scrap and coal segments and claiming limited allocation of material, a Brazil-based BPI supplier sold the cargo in question at a price unchanged compared to the level in the deal done to China at the end of last week by another Brazilian supplier.
Accordingly, SteelOrbis has learned of the latest ex-Brazil BPI cargo sold to a major US steelmaker at $500/mt FOB, for January shipment. Taking into account the freight rate to the US at $50/mt and finance costs, the CFR price is assessed at around $555/mt CFR Port of New Orleans. “This level is extremely low, taking into account the recent developments in the global raw materials segments,” a CIS-based BPI producer commented with regard to the booking. In particular, at the beginning of the current week, a Russia-based BPI producer was seeking to get $570/mt CFR Port of New Orleans. Meanwhile, other market insiders have presumed that the price in the ex-Brazil booking was fixed at the beginning of negotiations (likely at the end of last week) and, therefore, lags behind the rapid developments in price policies of other global BPI suppliers. “For me, it means that the market outlook for January is not as great as others believe,” an India-based BPI producer assumed. Meanwhile, CIS-based BPI suppliers have maintained their bullish stance in offers, chiefly citing the shortage of material. However, according to SteelOrbis’ assumptions, some CIS-based BPI producers still have volumes for shipment even in November. Overall, while some CIS-based BPI sellers have preferred to hold on to material, expecting some rise in prices, other have continued to test the market with offers, quite overvalued compared to tradable levels, namely, at $600-650/mt FOB Black Sea, which is $70-120/mt higher than prices accepted by BPI customers in the previous bookings. “A tense situation with the availability of prime scrap, in particular, in Europe would encourage European steelmakers to increase their consumption of pig iron. We have already noticed the rise in inquiries from there,” a Ukraine-based BPI producer told. “It is a different story with the US market where the customers booked material before the launch of export duty in Russia at prices much lower than now,” the source added. An additional support for suppliers’ positions for BPI to Europe appears likely to come from the energy crisis. Specifically, due to the exorbitant prices of natural gas, which is used in the production of DRI (one of the pig iron counterparts in the steelmaking process), the European mills are likely to shift to bookings of pig iron instead of DRI production.
Meanwhile, buying interest from China has remained constrained due to the divergence of offers and bids. Following the recent dramatic drop in futures prices in China, the situation there has even deteriorated further. Specifically, while at the beginning of the current week Chinese customers were ready to book material at $560-570/mt CFR, towards the end of the week some sources have started to voice $525-540/mt CFR as workable levels. “The situation is terrible in China now. While Shagang [China’s largest private steelmaker] booked the cargo from Brazil, nobody else is buying anything for now,” a major Asia-based trader commented.
Meanwhile, some BPI demand has been seen from Taiwan. In particular, SteelOrbis has heard of a few ex-Brazil BPI cargoes sold by traders from a position at $600-605/mt CFR.
India-based BPI suppliers, in their turn, are not in a hurry to export material, benefiting from solid demand and high prices domestically. Specifically, the prices in the local Indian market have reached $600-610/mt, according to a few sources.