Miller on Raw Materials: Pig iron tags move up, N. Europe scrap imports to US resume

The pig iron market in the US has abruptly increased over the last two weeks. According to sources in the Brazilian pig iron trade, two cargoes of 55,000 metric tons (mt) traded at $430/mt FOB Southern Brazil.

This is a $15/mt price rise over a cargo sold a week earlier, which was a $20/mt increase over January pig iron sales levels.

The approximate CFR price for US-based buyers has risen to $453-455/mt. That compares with $415-420 earlier this month.

These new cargoes will not be shipped from Brazil until the second half of April. This means this material will not arrive upriver to the buyers’ melt shops until late June.

Southern Brazil produces basic pig iron with phosphorus levels of 0.15% max, which is considered high by US mills and foundries. The lower phosphorus pig iron grades from Northern Brazil and the Commonwealth of Independent States (CIS) are more expensive and in shorter supply. Prices on this variety are still in flux.

This price increase gives future prices for ferrous scrap, particularly prime grades, room to increase now that the price differential between pig iron and busheling has widened by at least $20 – 30 per gross ton, depending on the mill buyers’ location.

Northern Europe scrap imports to US

Sources have also told SMU there has been a resumption of imports of prime scrap from Northern Europe to the US.

This is not unusual but does obviate the increased demand for industrial grade, low-residual scrap.

Our sources have also heard, in addition to prime scrap imports, US mills are being offered shredded scrap, which would normally be sold to Turkey with cargoes of HMS 80/20. This is unconfirmed at this time, but if these rumors are true, it points to more strength ahead in the domestic scrap and steel industries.