Miller on raw materials: A pig iron market update

Written by Stephen Miller

The pig iron market has risen in recent months from the high $390s per metric ton (mt) last fall to $490/mt for Brazilian material and a bit more for Ukrainian product – for an overall average of $495/mt CFR.

This has coincided with the rise of the US scrap market during that period. (January being the exception to the general rule.) But pig iron did jump first.

What the market is saying

So, where are things going from here? SMU reached out to a prominent pig iron trader and distributor based in the US to get his perspective. He characterized the current market as “firm and quiet.” But he added that pig iron should continue to rise from the $495/mt level to $505-510/mt CFR in February, with foundry grades increasing from $570-580/mt to $600-610/mt.

We contacted a Brazilian executive to see how he sees the export market there. He also said things were quiet now. The offers from southern Brazil were still at $450/mt FOB. But “no business has been concluded yet,” he said.

He thinks US buyers are waiting to see how scrap prices behave for February shipment and beyond. He also said European buyers of pig iron are being supplied by both Ukraine and Russia, and it’s difficult for Brazilian material to compete.

SMU received comments from a steel mill buyer of pig iron as well. His opinions differed from those of the two other sources. He pegged Brazilian pricing in the $460s/mt with Ukrainian in the $490s/mt because it contains less phosphorus (“low phos”).

Recall that phosphorous can make steel brittle. That’s why low-phos pig iron carries a premium.

He said pig iron had “good availability and supply/demand in balance.” But he noted that “scrap is a bit weaker, and steel prices are wobbly. … Expectations are markets will come off a bit.”


In reviewing these comments, it may be implied US ferrous raw material buyers will try to take down the domestic scrap market again for February – as they did in January. This has become evident as it’s been reported that several mills have issued cancelations for certain grades, especially #1 busheling.

Many market participants thought this was unlikely since a significant portion of the January scrap orders remain unshipped because of winter storms in January. It is noteworthy that at least one mill is not canceling shredded scrap orders because that grade was hardest hit by the winter weather.

Not all mills have canceled yet because they seem to have certain needs for continued shipments. And after the market’s strength was initially misjudged in December and in January, it should be interesting to see how things develop in February.

As for pig iron, mills know Brazilian exports have scant competition from destinations other than the US. The only other takers are Mexico and perhaps a South American country.

SMU will follow what ensues in both the pig iron and scrap markets and keep our readers apprised of what we learn.

Editor’s note: We reported last week that the railroad border crossings into the US from Mexico were closed. We now understand they are now open.

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