Pig iron stalls, scrap slides

There is not sufficient buying activity in the pig iron market to determine whether prices are going up or down, traders agree. Scrap prices, however, have retreated, and pig iron suppliers suggest that pig iron might not be affected by the downward drift because supply continues to be snug.

Brazilian pig iron producers have not lowered their offerprices from $550 per mt, c.i.f. New Orleans but many of them have stepped away from the market. “The producers know scrap prices are down, and they don’t want to be forced into a discussion about reducing pig iron prices,” said a trader.

Most northern Brazilian producers don’t have any material available until April shipment. As a result, they are not under any pressure to make sales currently. It is possible that some small sales of Russian pig iron have been made in Europe at $550 per mt, f.o.b. Black Sea, but European traders note that buyer resistance is particularly strong evenat $480 per mt, today.

US scrap prices fell $20-30 per lt in most parts of the country. In Chicago, which was hit with a massive snowstorm, scrap prices were only $15 less than in January. Turkey has not been buying much US scrap, which has meant more materialis available domestically. Last week, traders said a scrap sale was done in Turkey at $450 per mt.

Some metallics suppliers are banking on scrap prices recovering in March. They say the order books of mills are strong into the second quarter, and some more blast furnaces are being turned on in North America to meet anticipated demand. Essar Steel Algoma, for example, said it had restarted its No. 7blast furnace last week and expected it to return to normaloperating levels in a few days. ArcelorMittal said that its average
operating rate in 2011 would be 76% compared to 69%.

“It’s not much of an increase,” said an analyst, “but it is whenthere is no raw material inventory on the ground.”

The HBI market has gone even quieter now that the exportmarket for scrap has stalled. Traders report that prices out of Venezuela are $390 per mt, f.o.b.. However, almost no HBI isbeing shipped from Venezuela. North American consumers would have to pay roughly $430-440 per mt, c.i.f. New Orleans, but with scrap readily available, few consumers arelooking at HBI. A sale of Libyan HBI reportedly was done in Spain at $470 per mt, although traders felt the price was inflated.