The US import basic pig iron market has remained negative despite a rumor about one deal signed at higher price, which has been assessed by most market sources as “talks not reflecting market.”
There has been a rumor in the market about a deal for ex-Brazil BPI with 0.15 percent of phosphorus content done at $485/mt CFR New Orleans for June shipment, which is up from the previous tradable level of $470-475/mt CFR. Nevertheless, most of the sources polled by SteelOrbis have denied this information. One of the international traders said that this deal as per checking was done long time ago. Another Brazilian source said that offers could be at this level, but “the market is fully silent, I don’t see US buyers really in the market.” So, the abovementioned deal has been called speculation, not reflecting the real market conditions, especially after a 10 percent tariff announced in the US. The tariff will lead to an increase in US importers expenses by up to $48/mt with the current prices, so the major steel mill has been aiming to cut prices by at least $50/mt, according to market sources. “A few exporters are not even in the market, so I doubt this price is true,” one more Brazilian source said.
The SteelOrbis reference price for ex- Brazil BPI with 0.15 percent of phosphorus content has remained at $440-450/mt FOB. The abovementioned rumored deal would be equivalent to $455/mt FOB, but since there are offers at $450/mt FOB in the market and overall negotiations with the US are inactive, this level has been not included in the reference price.
Overall moods in the US have been negative also due to the expected further decline in local scrap prices in May, with the drop awaited at $30/gt after cuts by $20-40/gt ($20-41/mt) during the recent April buy cycle.
Nevertheless, when US mills start buying for Q4, CFR prices may be impacted by an increase in freight rates. The Office of the US Trade Representative (USTR) said that it will start to charge Chinese vessels, coming to the US in 180 days. In particular, from October 14, Chinese-built and owned vessels will be charged $50/nt with further increase by $30/nt per year over the next three years. At the same time, Chinese-built vessels owned by non-Chinese companies will be charged $18/nt with an annual fee increasing by $5/nt. The announced measures are softer than initially expected as last month the proposed fees range from $1 million to $1.5 million were for each time Chinese vessel docked at a US port.
Nevertheless, since the 47 percent of the existing dry bulk fleet is Chinese-built, the freight market and prices will be impacted for sure, market sources believe.