PIG IRON Summarization and outlook of last week (17-23 Jan. 2011)

At the moment, prices for pig iron and high-quality scrap are almost on the same level and some mills are purchasing small batches of the former in the domestic or stockists market, due to the short delivery time and deferred payment option available. Market participants inform that some Russian suppliers have sold a small pig iron lot of 3,000 tonnes from Ust-Luga Baltic port at $530/t FOB ($545-550/t C&F ports of Northern Europe). Previously, the transaction prices were at $495-500/t FOB ($520-525/t C&F ports of Spain).
And though new prices have not yet been supported by large contracts, exporters have raised their offers to $560-570/t southern ports of the EU. Currently they have not many arguments to justify their increase, as February production of the material has not yet been sold-out and there are substantial amounts of unsold pig iron available in ports. Due to this, not all the Russian suppliers stick to upward trend. A contract for low-quality pig iron has reportedly been signed recently at $500/t FOB.

Ukrainian pig iron is available at $495-500/t FOB Black Sea, and there has been a deal reported at this level. The material will be shipped to Belgium, with C&F-price being $540/t.

Most buyers in the Far Eastern pig iron market refrain from imports of the material citing too high offer prices while their stocks are sufficient so far. Moreover, steelmakers hope prices will drop soon, leading to a reversal of the upward trend, and then they will resume purchases. Their moves are based on a forecasted decrease in scrap quotations. Russian material from Far Eastern ports is currently being quoted at $535/t C&F ports of Taiwan. Trading company Stemcor is reportedly offering a lot of Russian material previously bought at about $500/t FOB. The latest contracts with suppliers of Russian pig iron have been signed at $510/t C&F Taiwan.

Besides, quotations of Indian material have grown as well, because traders, who buy it on a tender basis, are bullish now. Thus, Indian pig iron is now available at $557-560/t C&F, by $15-20/t higher than last-week levels.

Prices for Brazilian pig iron are less competitive mainly due to high freight rates, so its offers are limited. Suppliers from Brazil are ready to ship the material at $560/t C&F. Buyers are forecast to remain inactive at the end of January, waiting till the situation with scrap and finished products becomes clear. They can afford it having enough pig iron in stock.

By now, the US pig iron market has seen several deals that supported new price levels. Thus, two bookings of the material from northern ports of Brazil have been reported at $537-540/t C&F, $20/t up from the previous transactions. The material will be delivered in March. The bookings have been made both by steelmakers directly (Nucor) and by trading companies. Russian suppliers, who usually sell pig iron without any intemediaries, have been more successful. They have pushed through a $50/t increase deals have been made at $550/t C&F for February production. Presently, the US market is the most attractive destination in the world since demand in other regions is soft exporters can sell their material at high prices only to the USA.
Buying interest of US steelmakers is strong for several reasons: first is favourable conditions in the finished product market, where prices leaped by $75/t in the past week, and optimistic forecasts that the situation will stay the same. This makes steelmakers as well as traders, who plan sell pig iron to the former in March, believe that prices will remain at the current levels in spring.