Merchant pig iron standoff continues, buyers bid low
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Prices for merchant pig iron remained largely unchanged in the past week amid lack of visible trade and some buyers reducing their price expectations, Kallanish observers.
Despite China's finished product demand and prices notching up, the dynamic failed to affect the stagnation in pig iron prices, while ferrous scrap prices continued to weaken in Turkey and some Asian destinations. The US domestic ferrous scrap settlement, although slightly less bearish than was expected, still vectored down, supporting US buyers' on-the-fence attitude to pig iron importing.
The US import market, hence, remained largely in a state of the balanced stand-off, with both buyers and sellers sticking to their guns and not engaging in negotiations. With declining steel product prices, softer scrap, and healthy arrival schedule, buyers are not expected to chase imported pig iron until the end of the month.
A major buyer's position remained at $420-430/tonne cfr Nola, while Brazilian sellers stuck to $500/t fob or just slightly under. Ukrainian material was not priced for bids, but understood to be lower than Brazilian but still much higher than US major buyers' price idea. With Brazilian 2022 loading allocations closed, and strong currency and high costs preventing large price concessions, some mills are implementing very minor output cuts. According to a couple of traders, 5-7% of furnaces were closed for maintenances.
"It is very insignificant for Brazil in this season," one trader says.
In Northern Europe, Ukrainian material was available for December shipment at the same $555-560/t cfr, while lower priced offers were also heard in Italy, at around $520/t cfr.
Italy, however, remained in observing mode, harbouring large stocks of material, which isn't easy to move, traders say. Stocks in ports are said to be significant, purchased at various prices, and include traditionally higher priced non-sanctioned Russian and sanctioned Eastern Ukrainian material. Subsequently, some of this material was offered to Eastern Europe, working out cheaper than new production Ukrainian material, but no sales were heard. Only one foundry grade Russian lot was heard sold ex-stock, but the price was unclear.
Turkish demand continued to dwindle, with one buyer heard willing to buy Russian material at the level of premium HMS 1/2 80:20 price, and some others at around $380-385/t cfr, in line with earlier Eastern Ukrainian offers, but no seller obliged. Instead, it was offering relatively small tonnage at $390-395/t fob, but buyers did not accept, and no sales were made as a result.
Asian demand circled $380-400/t cfr, depending on destination, down considerably on Russian sellers' offers of the week prior, also resulting in stalemate. Overall, Russian sellers are not expected to be offering much until the rest of the year, as production is reduced, and costs are pressuring to keep prices at around $400-420/t fob Far East and $450/t fob Black/Baltic Sea, sources note.
Katya Ourakova UK