Market
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July 16, 2024
Prices may have hit rock bottom as pig iron defies trend
Written by Stephen Miller
We have seen scrap prices continually fall since January, especially for prime scrap. In July, ferrous scrap prices traded sideways except for MST and Busheling in certain districts. Sources we’ve spoken to are saying that the recycled metals market is at bottom.
The price for Busheling seems to have stabilized at prices of $370-$380/gt, but RMU has heard some buyers have had to pay over these prices to fill their requirements. But what has happened to the main substitute for prime scrap during this period, namely pig iron?
Pig iron has not behaved the same way during this period. The pig iron market has traded in a tight range for the first half of the year.
During the last two months, the general price of pig iron averaged +$485/mt CFR to U.S. buyers. Its price essentially decoupled from #1 Busheling during this time. It was only after the June drop of $40/gt on Busheling that the Brazilians lowered their price.
Still, users of pig iron are paying a hefty premium for this product when compared to prime scrap.
RMU spoke with an executive in the pig iron trade in Brazil. He confirmed three U.S.-bound cargoes were concluded earlier this month. The prices ranged from $470-$475/mt CFR, which was a drop of $10-$15/mt.
He added that producers were waiting to see how the U.S. scrap market trends before deciding to raise their prices.
The costs of production have unexpectedly increased due the dry weather in Brazil. Additionally, he mentioned the demand from domestic Brazilian users has increased.
“There is a positive trend for a small recovery in the pig iron price for the rest of the year,” he said.
We reached out to a U.S.-based buyer from a major steelmaker to obtain his thoughts on the pig iron market. He declared that prices were less than the ones being reported, citing general price levels closer to $460-$465/mt CFR. He believes future prices will remain flat until domestic steel and scrap prices stabilize and move up.
Another U.S.-based pig iron trader told RMU that he believes the pig iron market will stay generally firm going forward since production in Brazil is stagnant and there are few other sources from which U.S. steelmakers can draw material.
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