Pig iron suppliers seek to pass on higher production costs to Turkish buyers

In last week's Turkish domestic pig iron market, Turkish steelmaker Kardemir kept its sales prices unchanged from the week before. According to its price list dated February 23, Kardemir's H1 grade pig iron price has been maintained at $600/mt + VAT, while its H2 grade pig iron price stands at $590/mt, its C1 grade pig iron price is $575/mt + VAT, while its C2 grade pig iron price has remained at $565/mt + VAT. Meanwhile, the pig iron prices of Turkish integrated steelmaker Erdemir's subsidiary Isdemir are significantly higher as compared to Kardemir's price list, causing buyers to be reluctant to conclude new purchases.
 
Australian iron ore contract prices for the second quarter of this year, based on the average iron ore spot price in the December-February period, have reached $170/mt excluding freight rate, increasing by 40-45 percent as compared to the second quarter of 2010. Thus, iron ore prices are maintaining their strength, in line with strong coking coal prices, as a result of the floods in Australia's coal-rich Queensland region. On the other hand, the Indian government has announced a 20 percent export tax on iron ore fines and lumps effective from March 1, 2011. The previous export tax on lumps and pellets was at 15 percent, while the export tax on fines was at five percent. Consequently, pig iron production costs have increased significantly. However, since buyers are taking into account the weakening of scrap prices, pig iron suppliers have been facing difficulties in reflecting the increased costs in their own sales prices.
 
Recently, pig iron offers to Turkey have been mainly given via international traders. SteelOrbis has learned that ex-Ukraine pig iron offers to Turkey stand at $505-515/mt for late March and April shipments.
 
On the other hand, nodular pig iron offers to Turkey are at $650-660/mt CIF. Nodular pig iron suppliers have continued to accept orders for April shipments.