Uncertainties have increased in the global basic pig iron market due to the spread of the Covid-19 virus and consequent economic troubles. The number of spot deals in the segment has dwindled to almost zero with China being the only market currently interested in buying, but current bids are not workable. As a result, some have sellers lowered their offers, while some prefer to wait for a clearer market as their allocation is limited.
Solid BPI offers ex-CIS have been rare and mainly voiced at $325-330/mt FOB levels versus $330-343/mt FOB fixed in deals in early March. “We are hostage to the current situation. While the supply is limited and demand is scarce it is hard to understand which levels could be workable,” one of the key CIS-based BPI exporters said. Offers for low-manganese pig iron have been voiced at $340-345/mt FOB Baltic Sea.
Sellers say demand these days is coming from China mainly, but no deals have been reported as bids are at $330-345/mt CFR, while the freight cost is estimated at over $45/mt, SteelOrbis understands. Some sources expect even more pressure on pig iron prices from China as there was a slab sale there at as low as $395/mt CFR. “It is a tough market. Besides the lack of activity, new logistical challenges appear every day,” a source said.
The coronavirus emergency has brought the European pig iron market to a standstill. “The market is obviously quiet these days, if not stopped and interrupted. Steel plants as well as foundries are planning their operations day by day. Nobody knows how long it will last,” a European trader told SteelOrbis. Others hope production in Europe comes back on track in a couple of weeks, similar to what happened in China.
In the current market circumstances, Brazilian sellers of BPI with 0.15 percent phosphorus content have decreased offers by $10-15/mt week on week to $325/mt FOB. The latest sale for 40,000 mt was concluded to the US about 10 days ago at $324/mt FOB, which corresponds to about $350/mt CFR.