Turkish foundries on hold amid rising pig iron prices

Turkish mill Kardemir has increased its list prices of steelmaking basic pig iron and hematite pig iron effective as of April 29, 2011. After the increased pig iron prices announced by Kardemir, foundries in Turkey have decided to delay their purchases.
 
Accordingly, the new price level of H1 grade pig iron increased to reach $580 + VAT, the H2 grade pig iron price rose to $570/mt + VAT, C1 grade pig iron increased to $55/mt + VAT, and the price of C2 grade pig iron climbed up to $545/mt + VAT. All prices indicate a $20/mt increase over the previous price list dated April 19, 2011.
 
Another local producer Isdemir is taking a break from pig iron sales, which makes the price rise announced by Kardemir more remarkable. However, domestic foundries continue to use imported pig iron due to quality issues regarding the domestic supply. Some foundries are reportedly buying scrap from the local market in order to support their requirements.
 
As we mentioned in our previous analysis, certain European pig iron suppliers had started to offer material directly to the Turkish foundries. However, the euro/US dollar exchange rate subsequently touched 1.48 levels and the chances of pig iron imports from Europe diminished.
 
Turkey's overall exports in the month of March increased by 19.6 percent year on year to reach $11.84 billion, while imports in the same period increased by 44.1 percent to reach $21.65 billion in value. Pig iron imports during May are expected to speed up and gain an important share in foreign trade.
 
Last week pig iron export offers given from the south of Brazil were at $505-515/mt FOB, while offers from the north of Brazil stood at $515-525/mt FOB levels. Both offer ranges are for June shipments.
 
In southern Brazil, domestic pig iron demand continues to remain strong, and the pig iron producers in the region are not under pressure to export. Despite this fact, all eyes are turned to Brazil again following the  25,000 mt pig iron tender announced last week in Mexico.