The total 2024 quota for ex-Russia pig iron in Europe has been exhausted this week, accelerating talk about a possible rise in import prices up to November amid the deficit of cheap material. However, for now, bids have improved only slightly, and the market is still evaluating the allocations from Asian and Ukrainian BPI suppliers. As for Russian BPI, all market sources agree on the downtrend expected for the current month due to the switch by a number of suppliers to some lower-priced markets like Turkey and India.
As for the latest update on September 4, the quota for Russian pig iron in Europe has been filled by 1.098 million mt out of a total 1.14 million mt for 2024. But the balance of 41,759 mt will be customs cleared in the coming days with already nearly 43,000 mt of inquiries for customs clearance of this material made by suppliers. “In fact, the quota finished on Tuesday [September 3], when the balance was 106,000 mt and inquiries [for customs clearance] for 108,000 mt,” a local source said.
The quota for 2025 will start on January 1 and it is much smaller, just 700,000 mt, and so it is expected to be exhausted already by the first quarter. “I think, around 150,000 mt of [Russian] pig iron will wait at European ports to be customs-cleared from January, and mills will actively negotiate further shipments in December-February within two months. Considering the quota for 2025 is only 700,000 mt, I believe it will be finished in February,” a market source told SteelOrbis.
These developments have triggered more inquiries by European customers to alternative pig iron suppliers, like Ukraine or Asia. “Italy is actively asking for pig iron, but the highest bids are at $430-435/mt CRR for now,” a Ukrainian seller said. This is a slight improvement from the last deal for Russian BPI to Italy done at $425/mt CFR a few weeks back and from bids at as low as $400/mt CFR in late August. However, it has not been enough for sellers with only some indicative offers heard at $450/mt CFR from Ukraine.
Though it is clear that import prices in Europe will move up in September and October, the market participants are still divided by how much they will increase. “Some $20/mt rise will be accepted and is reasonable in the current conditions. I do not think that much more will be supported by buyers,” a European source said. Some Russian mills prepare to increase offers to Europe in November and will minimize sales or sell cheaper in other markets.
For instance, one of the Russian mills is heard to have sold at as low as $380/mt CFR Turkey, but this has not been confirmed by the time of publication. The price translates to nearly $360/mt on FOB Black Sea basis or even lower. “Many offers [from Russia] will emerge in Turkey now, so I will not be surprised by this price,” a trading source said.
For Russian BPI exporters, apart from Turkey, India may become the alternative sales destination in the absence of Europe. The last deal for import BPI in India was done at $392/mt CFR, but for Asian origin, sources have said. No new transactions have been reported for now, but some market sources said that bids would not be above $390/mt CFR. With the high freight from the Black Sea to India at not less than $50/mt, this translates to $340/mt FOB.
This week, the ex-Russia BPI reference price has been settled at $355-395/mt FOB Black Sea, with the midpoint at $375/mt FOB, down by $15/mt on average from last week. The higher end of the range is based on some high offers by at least two mills for relatively small volumes of pig iron for foundries.