Trading activity has eased in the Black Sea basic pig iron (BPI) market this week as sellers have been insisting on higher levels, following some deals done previously, while major buyers, especially steel mills in Turkey and Europe, have been strongly rejecting higher levels, stating that scrap prices are moving in the opposite direction.
Offers for pig iron with high manganese content from Russia have been reported at $420-425/mt FOB for March shipment, similar to the last deals done by a major mill at around $420/mt FOB as reported a week ago. But demand has been slow this week. The workable price for pig iron in Italy - the main sales destination for Russian suppliers - has been very wide recently - at $425-450/mt CFR, according to market sources. The higher end of the range corresponds to the sale from the mill to a distributor and sales to foundries. At the same time, steel mills’ price ideas are much lower. The last contract for a big volume was done around ten days ago at $420-425/mt CFR. After that, negotiations have been held at $430/mt CFR at the highest, but the main Russian mill did not accept this, as it translates to $400/mt FOB. “Scrap [prices in Europe] will go down, just have a look at US deals to Turkey, so I don’t see any support for pig iron,” a European source said.
Nevertheless, Russian mills are mainly taking a wait-and-see-position. Offers for pig iron with low manganese content have been heard at as high as $440/mt FOB, while the highest deal for this grade was not above $420/mt FOB previously. This new level does not reflect the real market picture, according to sources.
In Turkey, another major trade destination, the lowest offers for ex-Russia BPI with high manganese content have been heard from traders at $440/mt CFR, translating to $415-420/mt FOB. But no new deals have been reported so far. Last week, some bids were at $430-435/mt CFR, but, with the latest decline in US scrap prices in Turkey and excessively high offers for pig iron, buyers have been on the sideline. There has been a rumor also about an ex-India BPI sale to Turkey at $445/mt CFR, but at least two market sources said that this is an old deal done around 20 days ago and was claimed to be a Brazilian cargo that time. “I would say that $445/mt CFR is good and a reasonable price for non-Russia [BPI], but it is hard to find,” a Turkish source said. The latest offers from mills in Brazil have been at $440/mt FOB, while Indian suppliers, who were assessing the market at $420/mt FOB in January, have also been trying to voice $435-440/mt FOB, which is too high for any buyer.
The SteelOrbis reference price for ex-Black Sea BPI stands at $395-423/mt FOB, just slightly widened from $400-420/mt FOB reported on Monday, February 5.