Brazil catches up with CIS pig iron prices

Posted on 22 November 2021

The merchant pig iron market was quiet last week amid the ongoing reshuffling of fundamentals, but the previous week's firming sentiment pushed Brazilian suppliers to increase prices and nail US sales.

Although demand in the US remains lacklustre, regular single weekly sales continue to take place, keeping steelmakers' stocks topped up. The regularity of Brazilian deals into the US in the last six weeks has extended producers' lead times firmly into February, catching up to the fast-paced trade dynamic of early 2021, Kallanish observes.

A 30,000-tonne January-loading northern Brazilian pig iron lot sold to the US early last week at $570/t cfr Nola, $20/t up on a previous week's sale, and more in line with CIS pig iron sales two weeks prior. The fob price for the cargo is estimated at around $530-540/t, supported by the harmonising freight market situation, with many routes experiencing easing of rates and lesser volatility. This is connected with de-bottlenecking in Chinese ports in the last two months and a general decline in shipping volumes globally, traders note.

There were no sales or heard negotiations with CIS suppliers in the US, apart from the long-term formula-based contracts with both Russian and Ukrainian suppliers. The latter are not offering to the US due to lower-than-previously-planned production volumes pegged by the ongoing shortage of coking coal and coke at the country's mills. Russian suppliers' offers starting at $550/t fob are still too high for the US market, pushing up to $600/t cfr Nola. This is even given softer freight rates that are circling $50/t for the regular large volumes.

Meanwhile, the Italian market remains relatively calm, but expectations for demand to remain stable are strong. Portside prices are circling $600/t, while larger, imported lots are quoted at $580-590/t cfr, and supply is scarce. Italian distributors are expected to return to the market for large lots in December, before the holidays start later in the month, traders expect.

Turkey did not book any volumes in the past week, having been focussing on scrap trade for January, and having booked enough material in the past six weeks. Indian material continues to be offered, but at higher than CIS prices, it is largely ignored by buyers. CIS material can be booked at $570/t cfr, while Indian pig iron is at $580-585/t cfr and with longer lead times, traders say.

The ongoing softening sentiment in Asia has led to no inter-regional sales, with China still out of the import market.

Source : Kallanish