The last minute decision of the US to exempt a number of products, pig iron in particular, from 50 percent tariff again surprised the market and the market is expected to adjust to the new normal in term of price with no further sharp ups and downs expected after the trading resumes at new “old” conditions, market sources polled by SteelOrbis believe.
Just last night, a few hours before the announced exemption of pig iron from 50 percent tariff against earlier announced 10 percent reciprocal tariff, most of market sources from the US importing side was sure that the trading with Brazil will be halted. But surprisingly, the decision emerged as the best-case scenario, for both Brazilian exporters and US importers.
Now, Brazil and Ukraine will have 10 percent duty, Indonesia – 19 percent, Indian and Malaysia – 25 percent. “In fact, the major sellers [Brazil and Ukraine] are at 10 percent, and the market will resume normal work,” an international trader commented.
“Everyone [from Brazilian producers] is in internal meetings to define next steps. The question is what the new level will be. Prices at $400/mt FOB [or slightly below] were a result of the 10 percent tariff. So, now we are back to the previous conditions,” a Brazil-based source said.
Last week, the Brazilian BPI reference price fell to $370-380/mt FOB from $400-405/mt FOB before the announcement that the US may levy 50 percent duty. These levels were available from some suppliers to Europe, but with only 10 percent reciprocal duty Brazilian suppliers may attempt price increases, the question is only – how much? “We didn’t offer that low levels [$380/mt FOB and below], but there are no new offers at the moment, the announcement was just this night, the market needs time”, a Brazilian producer said.
Another Brazilian producer said that he expects the offer prices for Brazilian BPI "will start from $400" late this week, but the turbulence in the market will fade away only in a week or two. "I think we will not see even $400/mt FOB, prices will be higher," the third exporting mill said.
The SteelOrbis reference price for ex-Brazil BPI with 0.15 percent of phosphorus content has settled at $395-405/mt FOB, up by $25/mt on average over the week.