Whereas demand supported the uptrend in raw material prices in general in early August, the situation in the important pig iron producing markets worldwide has become more ambiguous since China (generally the most important buyer) has been out of the market since mid-August.
Looking at the CIS, Russian producers are not backing down in their offers and are insisting on price levels of $345-350/mt for exports. Since no prompt delivery material can be found from the important producers in Ukraine, ascertaining real price levels is becoming more difficult. It is thought that pig iron offers from Ukraine may be at $300-330/mt FOB.
Traders are still not sure if the abovementioned price levels will met with acceptance in Europe due to the uncertainty in this region. However, hope is increasing (as regards new purchase activities) as production capacity increases and as stocks are decreasing in some markets in Europe.
While Turkish steel producers were not very active in scrap purchase activity in the last week, they made purchases of pig iron instead. Following the purchase of Ukrainian origin pig iron by a producer in the Marmara region at $317/mt CFR Turkey, some other producers have concluded deals for pig iron at $330/mt CFR and slightly below.
In the local Turkish market it is observed that foundries are not buying for stocks and that in general demand from the foundries is not improving. Prices in the local market are now at $375-390/mt + VAT for basic pig iron (BPI) and at $425-440/mt + VAT for foundry grade pig iron. Additionally, it is expected that the September sales prices for nodular pig iron from South Africa will register an increase of $30/mt.
In Brazil, producers in the southern regions have reduced their prices to $315/mt FOB since their most important buyer China is out of the market now. It is heard that some producers have concluded deals at this price level. While producers' prices in the north are at $325/mt FOB, sales from northern Brazil to North America are at $350-355/mt. As scrap supply is tight in the USA and also given the uptrend in steel production capacities, it is expected that demand for pig iron will continue to be seen in the US.
While prices for basic pig iron and foundry grade pig iron in the Indian domestic market is stable, price levels of $335-340/mt are hoped for in the new export tenders due to China's silence in the pig iron market.
It seems that pig iron players in the international market are now trying to predict when China will recommence purchases. However, the global pig iron markets (which also keep a close eye on the scrap markets) expect that there will be no great correction in the international pig iron markets as there is no indication from the US that scrap prices will slacken and as pig iron supplies could possibly tighten in the global markets.