Weak demand for steel in the summer as well as declining bids from major customers have led to a decline in ex-Russia basic pig iron (BPI) prices this week. This has been expected by a number of sources and the market weakness has been confirmed by some lower-priced offers still heard by several buyers, though deals have been very occasional.
Europe’s import BPI market is coming closer to the holiday period. Some offers from major Russian suppliers have still been received by European customers at $460/mt CFR, translating to $435/mt FOB or so for a sizable lot of 20,000 mt and above. This is in line with at least one deal reported a week ago. “Pig iron is still the same as there is not much high-grade scrap available in Europe. You can see that the gap between bonus and shredded prices and [HMS] 80/20 prices is increasing, so sellers are holding back offers for pig iron,” a European source said.
However, unlike the previous few weeks, sentiments have softened coming close to mid-July and lower-priced offers from Russia are also available. In particular, another Russian supplier has been asking for $440/mt CFR, translating to $415/mt FOB Black Sea. The counter-bids for large volumes for August-September shipment have been at $430-435/mt CFR only. “There are very limited deals in Europe now. I see the tradable levels at $440-450/mt CFR,” another European source said. This CFR price translates to $415/mt FOB Black Sea for both small and medium-size lots. However, “the grain season has already started. So, these are the last vessels with freight at $25/mt. In the future, it will be $27/mt for 30,000 mt,” he added.
In Turkey, the market has been very uneven. One deal for low-manganese pig iron has been reported at $405/mt FOB as having been done around ten days ago. This translates to $425-30/mt CFR for small volumes. At least one source in Turkey has confirmed that $430-435/mt CFR for Russian pig iron would be the highest payable price in the market given the stable scrap prices. "The Turks want $405/mt FOB and the summer holidays have started there too," another source said. Nevertheless, some traders, working only with foundries and distributors, not steel mills, have said that high offers at $450/mt CFR are still there for them.
The SteelOrbis reference price for ex-Russia BPI in the week ended July 12 has settled at $405-425/mt FOB, with the midpoint at $415/mt FOB Black Sea, down by $7.5/mt over the past week.