Global BPI trading muted, no supply shortage concerns

Since the middle of the current week, all players in the basic pig iron (BPI) market have been largely focusing on evaluating the potential consequences of the imposition of new sanctions by the European Commission against Russia. Although pig iron appears not to have been included in the list of products subject to sanctions, market sources prefer not to come to any conclusions until the detailed text of the statement is presented. “The phrase about semi-finished steel products (subject to a transition period for some semi-finished) makes me suspicious. However, I have heard from several market sources BPI has not been affected,” an international trader commented. “I prefer to wait for the details to be published officially,” a Russian market source stated. Overall, no concerns with regard to the supply shortage among global pig iron customers have been seen in the market, though a certain decline in pig iron supply is anticipated. In particular, with a quota having been granted for slabs, Russia’s Novolipetsk Steel (NLMK) is expected to be focusing on slab production to secure the needs of its European subsidiaries. Meanwhile, it is not excluded that Russia’s Tula will remain idle until the second half of December due to the unfavorable market circumstances. Meanwhile, no changes with regard to supply from Russia-based Ural Steel are expected, with the mill likely to continue to struggle for customers in Europe due to more attractive prices compared to Turkey. While it is reported to be offering $450-455/mt CFR Maghreb, Turkish customers are still seeking to pay not higher than $390-400/mt CFR. Nevertheless, it is noteworthy that a deal for ex-Donbass BPI at $420-430/mt CFR was discussed in Turkey late last week. “I still do not see any interest for BPI above $400/mt CFR in Turkey. If any deal happened above this level, it may be either for prompt shipment or for specific chemical content,” a market source stated. According to some traders, Russian BPI producers have started to test the market with offers at $430-440/mt CFR for BPI with high manganese content, while offers for BPI with low manganese content stand at prices $30-40/mt higher.

US steelmakers, in their turn, may push BPI prices down in the next round of negotiations, following the recent decline in local busheling scrap prices by $40/gt. “With prime scrap in the US having moved to $360/mt, I am curious who will buy pig iron at $535-540/mt CFR,” a major international trader commented. “Apart from severe market conditions and, in general, lower demand, US steelmakers have adapted to higher consumption of shredded scrap instead of pig iron. Thus, I doubt any new deals will be done at the prices the suppliers are targeting,” a trader stated.

As SteelOrbis reported previously, ex-Brazil BPI was sold to the US at $500/mt FOB, with freight estimated at $35/mt. Meanwhile, ex-Ukraine BPI is reported to have been offered at $540/mt CFR.