Brazilian pig iron prices hit $480/tonne

By Juan Weik Published: Dec 29 2010 5:40PM SAO PAULO, Brazil -- 
Pig iron producers in Brazil's southeastern Minas Gerais state closed two export deals at $475 to $480 per tonne f.o.b. after several weeks out of the market, while companies in the northern region of Carajás have refused bids as high as $500 per tonne, according to producers and trading sources.
One of the Minas Gerais transactions was for 35,000 tonnes of pig iron sold at $475 per tonne to a trading company taking long-term positions reportedly looking to purchase more material to fill a 50,000-tonne vessel expected to sail to the United States in March.
One market participant claimed to have sold about 20,000 tonnes at around $480 per tonne also to a trading company, but it was unclear whether this was the same company that purchased the 35,000 tonnes.
The transactions came after several weeks of inactivity by Minas Gerais producers struggling to find alternatives to ship sold cargoes due to problems at Vale's Praia Mole seaport terminal in Espírito Santo state. Producers will ship some of those cargoes via the Paul terminal in Espírito Santo and the remainder from Rio de Janeiro.
"If this trading company is to really sell the cargo to the U.S. I would say the 50,000 tonnes would reach the country at around $510 to $515 per tonne c.f.r.," a trading source told AMM sister publication Metal Bulletin. "Freight costs from Rio de Janeiro to New Orleans for a ship of 50,000-tonne capacity are no less than $35 per tonne.
" In Carajás, producers have been trying to sell a 70,000-tonne cargo for as much as $510 per tonne f.o.b., according to sources. "We've just refused a bid at $500 per tonne," one executive from a major local producer said. The bid reportedly was made by a trading company looking to sell the material to the U.S. market in March.
With freight costs from Carajás to the United States running slightly below $20 per tonne, a transaction at $510 per tonne f.o.b. would mean a c.f.r. price of as much as $525 to $530 per tonne in New Orleans, market participants said.