Ex-Brazil basic pig iron (BPI) prices, which have been fluctuating in a limited range over the past few months, have dropped this week after a major producer sold a cargo to the US at a lower level. Despite the rainy season and higher costs in Brazil, US customers have been on the sidelines for a long time and have been insisting on discounts, and this strategy has worked this time.
A deal for 50,000 mt of BPI with 0.15 percent phosphorus content has been heard at $410-415/mt FOB (including financial expenses), translating to $435-440/mt CFR, according to some sources, and up to $445/mt CFR according to other sources close to the trade parties. Most of the market sources agree that the deal was in fact done, but the final price could not be confirmed by the time of publication. A few sources said that they see a higher possibility that the contract was at $415/mt FOB or $411-412/mt FOB at the lowest excluding financing, as “going down below this level would not be reasonable,” a trader said. However, some believe that the contract price was as low as $407/mt FOB excluding financing. “This is a terrible drop, but after no deals some producers had to start selling for January shipment,” a source from Brazil said. Some mills from Brazil are still offering $445/mt CFR for high-phosphorus BPI to the US, translating to $420/mt on FOB basis, but after the latest deal this level is already assessed as unworkable.
There is still a lack of offers for BPI with 0.10-0.12 percent phosphorus content with a few sources saying that now US customers will bid $450-460/mt CFR or so. But after a few deals from Brazil and Ukraine previously at higher levels, the allocation is limited now and some mills can offer only for February.
As a result, the export FOB reference price for BPI from Brazil has dropped by $16.5/mt on average since last week to $407-415/mt FOB, with the midpoint at $411/mt FOB. At the same time, the US import BPI price (including both high- and low-phosphorus material) has settled at $435-460/mt CFR, down by $12.5/mt on average.