Brazilian BPI mills target higher export prices, impact of scrap eases as discussed at IIMA meeting

Thursday, 18 April 2024 16:45:43 (GMT+3)   |   Istanbul
       

Brazilian exporters of basic pig iron (BPI) have been targeting increases in the next round of sales for June shipment. Even though for now no new deal has been signed yet, as both sellers and US buyers can still afford to wait, market sources believe that some small rise will be accepted in the coming weeks. As discussed by market sources at the bi-annual IIMA Members' Meeting in Lisbon on April 15-17, the impact of the scrap price trend on basic pig iron pricing has eased over past months and the market has been more driven by supply-demand fundamentals.

Offers for ex-Brazil BPI with 0.15 percent phosphorus content are at $450/mt FOB, translating to $480/mt CFR New Orleans. The previous deals were done at $430-435/mt FOB, and most market sources doubt that steel mills in the US will accept an increase up to $20/mt in the next round of purchases. “$440/mt FOB [translates to $470/mt CFR] could work out. We need to wait for new deals. No one wants to rush,” an international trader said.

The offer level for lower phosphorus pig iron from Brazil has been heard at $460/mt FOB and the tradable level is assessed at $450-455/mt FOB at the highest, according to market sources.

“We have high costs due to charcoal availability. So, to increase the prices [for pig iron] is necessary. Maybe not strongly, but some slight increase,” a Brazilian mill said.

After the sharp fall in local scrap prices in the US by $40/mt for HMS and up to $60/mt for bushelling in March, “pig iron [producers] didn’t follow. They just can’t and they are giving their prices based on demand from the US, which is stable,” a trading source commented during the IMMA event. A few importers of pig iron from the US also agreed on this point, saying that scrap prices have been going separate ways from pig iron lately. One of the reasons for this is the still relatively limited supply. Brazilian producers have not been eager to increase production much lately, waiting for better prices. At the same time, even though shipments of Ukrainian pig iron from Black Sea ports have restarted from late last year, the freight costs to the US have remained very high, around double compared to 2021 before Russia’s invasion of Ukraine. Ukrainian suppliers will ask for $480/mt CFR or above in the US in the next round of sales, according to market sources.

Ukraine has the potential to increase BPI exports by 20 percent or more this year depending on the market conditions and the war-related risks.

As for the correlation between BPI prices, Brazilian in particular, with the scrap trend in Turkey, market sources have also said that it has been weakening. For now, Turkey’s import scrap market has not changed much and is still relatively silent. “I would say, if Turkish scrap goes up, producers [from Brazil] may use it as a reason to push up prices [for BPI], but if it is stable or goes down, no one cares,” another source said.


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