Merchant pig iron rebound stirs US into buying
Posted on 24 September 2021
Demand for merchant pig iron continues to accelerate in all traditional buying regions. China's appetite has encouraged the US and Italy to start booking new volumes, and traders to restock in the past week. The resulting activity has lifted prices up, with producers raising offers already this week, market participants tell Kallanish.
Late last week a Ukrainian producer finally sold a large cargo to the US at just under $545/tonne cfr Nola for November loading, netting back to around $485/t fob. This raised price expectations for further sales from the CIS and Brazil to over $560/t cfr Nola this week. Brazilian offers to the US were at $560-565/t cfr for December loading material, but no sales were concluded in the past week.
China's buying continued, with two more CIS cargoes booked at $550-555/t cfr in the past week, netting back to $480-485/t fob, with $80/t freight. This brings the total booked in the past six weeks to over 0.5 million tonnes of CIS and Brazilian pig iron. The sheer volume of China's demand is encouraging interest mainly from traders at the moment, it appears, with several lots booked for the Mediterranean by large stockists.
A large – around 40,000t – volume of Ukrainian material was sold to Italian traders in the range of $548-553/t cfr, for October loading, with a net back price of around $500/t fob Black Sea. There were also sales of eastern Ukrainian material, at about $480-490/t fob for a large, circa 40,000t lot, split into parcels, destined for southern Europe and Turkey, sources note. Turkish demand is still idle, but southern Europe is slowly waking up to the possibility of not having its requirements met if China continues to gobble up available volumes.
Indian pig iron was heard traded to Southeast Asia, but not China, in smaller parcels, and at higher prices of around $520-525/t fob, down from its offers to China last week at $530-540/t fob. Supported by firm coking coal prices, Indian ironmakers are also unlikely to reduce their offers further, strengthening the consolidating sentiment.
But some traders are not convinced the ascending merchant pig iron price dynamic will stick, citing weakening iron ore prices and scrap price uncertainty. Sliding finished steel prices are also considered a dampening element, which may offset the upward pressure exerted by coking coal prices amid diminishing availability owing to China's appetite.Source : Kallanish