Global pig iron prices face pressure

The pig iron markets in the U.S. and throughout the international markets are weaker now than when detailed in RMU’s last report in September. Despite the aim of Brazilian producers to obtain a price increase due to the onset of the rainy season, there were other potential origins from where U.S.-based buyers could import. Indeed, pig iron markets in South Asia have weakened due to a lack of demand mainly caused by inexpensive imports of Chinese steel. Also, pig iron of Russian origin, which is sanctioned by Western nations, has been less costly. The European quota for 2024 was reached earlier this year and it has caused offer prices to decrease as a result.

At the meeting of the IIMA last month in Houston, there was not an agreement on pig iron prices for November/December shipment from Brazil. At that time Brazilian prices stood at $460-465/mt CFR and producers were looking for a bump up to $475/mt. The U.S. buyers wanted to bring pig iron down closer to low residual scrap. So, the parties left for home without any bookings. Shortly afterwards, there were two confirmed cargoes bought by U.S. mills of Indian origin at $450/mt CFR U.S. Ports. This recent transaction has tempered any further aspirations for an increase in pig iron prices for now.

It is questionable whether supplies from India can meet the constant trade flow demands of U.S. buyers. But this has set up future purchases from Brazil at similar levels on the next round of buying. RMU contacted a pig iron buyer at a U.S. steelmaker for his views on the market. He confirmed the Indian purchases and said, ‘the market will remain at $450-460/mt CIF NOLA from South Brazil in the next month and stable to firmer at the end of 2024.”

RMU heard from an executive director of a large pig iron channel in South Brazil. He said current offers were at $465/mt CFR NOLA for December shipment. Both Southern Brazilian and Indian pig iron are of the higher Phos variety as opposed to Northern Brazilian or CIS material, which are considered low Phos. These grades carry about a $10/mt premium over their higher Phos cousins. In fact, it was confirmed that a Ukrainian cargo was concluded at approximately $475/mt CFR.

In summary, it looks like pig iron prices will trade at or below $460/mt on the next round of purchasing. This assumes India or other South Asian producers can still supply the U.S. at about the same prices as their last sale. If not, prices from South Brazil could rise above this level, especially if the U.S. domestic scrap market rises as it is predicted to do. RMU has confirmed shipments of previously booked cargoes from South Brazil are behind schedule.