Scrap Insight: Scrap Optimization as a Hedge on Pig Iron Usage?

Some of the movements in scrap and pig iron pricing over the past 18-24 months have been quite drastic. At the International Iron Metallics Association (IIMA) meeting Oct. 2-4 in Nashville, Tenn., there were several reports presented on them. The breakout of hostilities in Ukraine severely impeded the flow of pig iron from the Black and Baltic Seas to the US. US-based electric-arc furnace (EAF) mills relied on pig iron from Russia and Ukraine for low-phos material. In fact, this reliance grew to over 60% of all pig iron imports over the last decade at the expense of Brazilian grades. This was a very risky strategy as it turned out.

After the war broke out, US users of pig iron realized shipments from this region would end soon. What followed was panic buying of pig iron from Brazil, and to a lesser extent, India. Even China sold us a cargo. The price rose from the mid-$500s to over $1,000 per metric ton (MT) on a delivered to New Orleans basis. Not only did pig iron rise, so did the price of prime scrap, like #1 busheling and #1 bundles. The busheling price jumped to $800/MT from $525/MT in a two-month period in the Ohio Valley, according to the CRU scrap price database.

Stephen Miller

Stephen Miller started his career in the scrap metal industry in 1978 at Luria Brothers in Cleveland. Over the last 40-plus years, he has worked in all capacities in the trading business. He has had positions in both domestic and international scrap trading. In addition to scrap, Miller was at the forefront of the pig iron trade and established a pig iron distribution company under the name of Ferrosource, Inc. Most recently, Miller has concentrated on the scrap export market and regularly does consulting for several companies in the industry.