Sources close to the market have informed SteelOrbis that pig iron prices are down. In late July, SteelOrbis reported $330-336/mt ($299-305/nt) FOB Chicago and foundry pig iron selling at $413-441/mt ($375-400/nt) FOB Chicago with market expectations for an upward move in prices. Prices moved down for Brazil pig iron export offers in August, though, and US buyers increased ex-Brazil purchases. By late August, prices declined to $320-331/mt ($290-300/nt) FOB Chicago for basic steelmaking grade and foundry grade was holding steady at $413-441/mt ($375-400/nt) FOB Chicago. At the time, distributors were expecting to maintain domestic pricing neutral for the remainder of the year and possibly even achieve a slight increase through tight supply management.
The August prices remained until last week as market uncertainty and lower scrap prices resulted in weaker September demand than expected. A Chicago trader described demand as “market is definitely off with some mills only operating at 50 percent capacity and foundries have slowed with short bursts of production.” A separate trader concurred that the “market needs some certainty to regain strength and uncertainty is presently looming.”
Due to the lag in supply fulfillment, interim warehousing, transportation to port, and barge transportation up the river, prices in Chicago are adjusting slower to the reduced pricing experienced in New Orleans in August for pig iron supplies originating from Brazil. Already reports are surfacing of recent pig iron deals ex-Brazil for $238/mt ($216/nt) FOB Brazil for basic steelmaking grade and $280/mt ($254/nt) FOB Brazil for the foundry grade. These pricing reflects a further downward pricing adjustment in a market facing weak domestic demand.
Pig iron is presently $298-309/mt ($270-280/nt) FOB Chicago for basic steelmaking grade and $391-413/mt ($355-375/nt) FOB Chicago for foundry grade. Pig iron transactions to end buyers are on a contract basis, and due to the pricing fluctuation risk for importers over the span of contracts, prices are not adjusted as frequently as other raw materials.