The global basic pig iron (BPI) market has been moving independently of the recent gradual decline seen in the scrap segment. Ex-Russia BPI prices have posted an increase mainly amid deals to traditional buyers such as Europe and Turkey. Even the rumored exemption of pig iron from export duties from June 1 has failed to push prices down so far. At the same time, the benchmark Brazilian BPI market has remained stable due to the lack of demand from the US.
The ex-Russia BPI reference price has settled at $415-420/mt FOB, versus $410/mt FOB reported last week, as more deals have been confirmed at higher levels over the past two weeks, while freight rates, especially to Europe, have been lower, which has supported FOB prices.
In particular, market sources have reported a deal done at $440/mt CFR to Italy from the major Russian producer to a distributor last week. This price translates to $415-420/mt FOB Black Sea as freight rates, which were at $30/mt previously, have declined, according to a number of market participants. Also, another deal for a smaller volume of 10,000 mt or slightly above has been heard from the same mill at around $418/mt FOB, also for the European market. “I think this is the new price level - $440-445/mt CIF Italy and $10/mt lower for Turkey,” an international trader said.
Some market sources agree that in this round Russian suppliers have managed to increase prices as demand is still seen and the inventory pressure has been weaker, while the quota for Russian pig iron in Europe for this year has been filling up, pushing buyers to sign deals to secure volumes. Another Russian mill is also heard to have sold some volumes to Europe. Initial offers were at $450/mt CFR, but a deal for 15,000-20,000 mt has been heard at a lower level, at around $442/mt CFR, according to some sources. Some market sources reported the price level in this deal as being at $431/mt CFR, but this has been assessed as too low for the current market conditions and it was said to be for a previous cargo of the mill sold weeks ago, some traders said.
In addition, a contract for 10,000 mt of Russian pig iron has been heard at $415/mt FOB for a distributor to Turkey, translating to $435/mt CFR. Of course, this price is too high for steel mills, who are focused fully on scrap and semis purchases at the moment, but it will be distributed to local buyers later. Another deal for Russian BPI with low-manganese content has been rumored at $415-420/mt FOB for Turkey, but the information has not been confirmed by the time of publication.
There have been no new deals reported to the Far East. Indian buyers bought a few cargoes of Russian and Southeast Asian BPI at $445-450/mt CFR in May and are not in the market at the moment. Also, even though there are some inquiries from South Korea and Taiwan, the busy railways to the Far eastern ports in Russia prevent any deals, while to achieve a good freight rate from the Black Sea, the sales volumes should be not less than 30,000-40,000 mt, while Far Eastern buyers prefer much smaller cargoes.
In the benchmark Brazilian BPI market, silence has continueed this week, and, even though some market sources report that negotiations have intensified, no new deals have been reported so far. “The last deal was around three weeks ago at $450/mt FOB [for Latin America],” a Brazilian suppliers said, adding that US customers are pushing for $440/mt FOB at the highest for BPI with 0.15 percent phosphorus content, “but producers are still holding the line at $450/mt FOB.” The import BPI price in the US has remained at $475-490/mt CFR until a new deal will be done.