US pig iron tags hold despite potential scrap price drop

 SMU has learned there were several deals struck on pig iron as the meeting adjourned.

Brazilian producer

A Brazilian producer who attended the meeting told SMU there were two cargoes sold to the US from Brazil for May shipment.

A US-based steelmaker purchased two cargoes at a price of $450 per metric ton (mt) FOB South Brazil.

He also said this means the delivered price to New Orleans was $475/mt CFR. This is same price paid earlier in March.  

US trader 

A US pig iron trader and distributor contacted by SMU said that in addition to these two transactions, a third one was sold at the same price for shipment to the US.

Commenting on the sideways price movement, he said, “Things are at a standstill right now,” as the US scrap market appears to be weakening.

He continued by saying he suspects the pig iron market should stay firm or increase due to limited supply.

US steel mill buyer

SMU also spoke with a US steel mill buyer who agreed on the general pricing of $475/mt CFR for South Brazilian basic pig iron.

He added that material of Indian origin was $10/mt less expensive and Ukrainian (lower P) was $10 more expensive. (This most likely applies to Low P pig iron from Northern Brazil.)

Busheling vs. pig iron spread

Based upon these recent deals, the spread between the cost of using pig iron vs. #1 Busheling will most likely widen.

In March this spread was $42 per gross ton (gt) and $25/gt, delivered to mills in the Chicago area/Lower Mississippi area, respectively.

For April, these figures will likely increase by the decline in busheling price tags, which is estimated to be $20-30/gt.