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Pig Iron Prices: ‘Nowhere to Go But Down’

Written by Tim Triplett


By Stephen Miller

Pig iron prices have declined by about $35/MT for sales concluded last week for delivery to the U.S. The latest sales are in the vicinity of $350/MT CFR. This has been a long time coming since the last confirmed cargoes were booked at $385/MT in November.

Prior to November, many market participants thought the U.S. scrap market would continue to firm into the winter months. This did not happen, but this perception caused offers for pig iron from Russia and Ukraine to hold at $385-390/MT CFR, with perhaps increases ahead. The U.S. mills held off purchasing and instead booked more imported busheling and bundle scrap from Northern Europe. This mitigated, to some extent, the need to continue booking pig iron at these levels. Keep in mind, $385/MT CFR equates to approximately $430-440/GT delivered to mills after barges journey upriver and are offloaded and railed or trucked to the furnaces. No. 1 busheling was at $400/GTD at that time and is about $350/GTD today.

When the December drops in the U.S. market became a reality along with the severe declines in the Turkish market, pig iron prices came under pressure. It was a foregone conclusion at that point that prices would have to come down significantly. However, there was some resistance to this from Russian and Ukrainian sources. Offers did come down, but not enough for the U.S. mills to bite. So, U.S. buyers waited until the suppliers had to get some sales on the books. 

Having no other options, since the U.S. is the only reliable high-volume home for Russian and Ukrainian pig iron, the U.S. buyers concluded several cargoes at the $350/MT CFR level. The Brazilian suppliers were basically on the sidelines since their production of acceptable chemistry pig iron has shrunk over the last decade. They reportedly are sold out until March shipment. 

Going forward, I don’t see pig iron prices rising even with a remote chance of U.S. scrap strengthening. Pig iron, at this point, has nowhere to go but down, at least for the next round of sales.

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