Pig iron market outlook cloudy

Our source said the Brazilian producers are not buying this and are not accepting this price level. This last buying prices for August were in the $401/mt FOB area.

Some sources have reported a confirmed cargo bought at $408/mt FOB, but there is scant additional information on this. Several sources have speculated this could be a low P cargo from the Northern Carajas region.

As major US mills are trying to buy at prices $20/mt cheaper than this, it’s hard to believe this cargo is coming from the Southern region, unless someone didn’t get the memo.  

There have also been reports from other publications about how the pig iron from Southern Brazil has been repositioned to flow to Europe. But this does not seem to be the case.

We mentioned in SMU’s last report on pig iron, Europe regularly buys specialty pig iron from Brazil and at times the vessel will load some portion of basic pig iron. But it is not a full cargo for steelmakers in Europe as this material is consumed by foundries on the distribution basis. At this stage it does appear Brazilian producers could do better in Europe pricewise than accepting to US price offers.

There is also a report that a US-based trader, not affiliated with a US steelmaker, has concluded a full cargo. Again, there are few details available about the price, origin or destination. 

So, there is much to confirm about the outcome of recent activities in Brazil. SMU will try to fill in the blanks as soon as we get more information.