Global shifts pressure alternative iron price

The pig iron markets have held their ground. The last rounds of buying for the U.S. resulted in a modest drop for Brazilian pig iron. The current pricing is $465/mt CFR for Hi Phos (.15% max) and $475/mt for Lo Phos (.10 max). These prices were only down $5-10/mt from previous bookings. The U.S. buyers do not want to pay these prices for the next round of buying since the U.S. domestic scrap market continues to be weak. But the Brazilian producers have the rainy season with which to contend. Also, there may be competition from new buyers abroad.

As mentioned previously in RMU, Europe still buys most of their pig iron from Russia and Ukraine, so Brazilian material goods are overwhelmingly sold into the U.S. If Europe relied even to some degree on Brazilian stocks, a shortage for the U.S. could be expected.

There is a quota for the European importation of Russian pig iron. As things move toward the last quarter of 2024, we understand the quota has been exhausted. If the Eurozone can’t source further from Russia and looks to Brazil for supplies, there could be some price competition with the U.S. buyers.

RMU reached out to an industry veteran about this possibility. He acknowledged European buyers have been inquiring about pig iron in Brazil but no business has been concluded thus far. At this time, there are cargoes available for November shipment, even though some channels already have commitments for November. He added that European and U.S. mills will probably compete for cargoes next year when the Russian quota decreases again before it goes to zero in 2026.

There may be some new suppliers which could mitigate the potential supply crunch. One of our mill sources claimed to have received offers from South Asia at $440/mt CFR USGC Ports. Since then, at least one offer has dropped further into the $420’s. That’s over a $40/mt difference than the recent purchases from Brazil. We have not heard of a booking yet, but rest assured, RMU will be keeping an eye on this and keep you updated. Even with these potentially lower prices for pig iron, the premium over #1 Busheling is $75-85/mt calculated delivered works basis.