Under pressure from increased costs pig iron suppliers seek to attract buyers

In the Turkish pig iron market last week, local steelmaker Kardemir revised its pig iron sales prices on February 16, for the first time in a long while. Thus, in the Turkish domestic market, Kardemir's H1 grade pig iron price have declined to $600/mt + VAT, while its H2 grade pig iron price has settled at $590/mt, its C1 grade pig iron price has dropped to $575/mt + VAT, while its C2 grade pig iron price has regressed to $565/mt. The prices indicate a decrease of $20/mt as compared to the producer's previous price list dated January 14.
 
Following the recent softening in imported scrap prices, Turkish mills have been hesitating to conclude new pig iron bookings, responding to ex-Russia and Ukraine pig iron export offers with counter bids as low as $500/mt CFR.
 
Russian pig iron export offers, which stand at $530-540/mt FOB as of this week, are expected to see an adjustment by the end of February, for April shipments.
 
On the other hand, iron ore prices that have been testing the level of $200/mt are increasing the production costs of pig iron suppliers. In the meantime, it is foreseen that the ongoing strong trend of coking coal prices will play an important role in pig iron suppliers' price adjustments for April shipments.
 
The difficult winter conditions which have increasingly been hitting Ukraine have caused freight rates from Ukraine to Turkey to strengthen.
 
SteelOrbis has learned that Brazilian pig iron suppliers, who had been waiting for the Chinese market to return from the lunar New Year holiday, are now targeting the level of $510-520/mt FOB for their pig iron export offers, following recent iron ore price increases.
 
Although production costs for international pig iron suppliers have increased continuously, problems in finished product exports, particularly in Turkey, now seem to have impacted raw material purchases. Historically, pig iron prices increase in the first quarter of the year. However, for 2011 this is not the case. On the other hand, the cautious stance adopted by the Turkish steel mills has led pig iron suppliers to focus on the Turkish foundries.