Pig iron prices rise further despite slow buying
Some destinations have accepted higher CIS merchant pig iron offers, but the US and China remain out of the market, as feedstock price volatility continues.
In a relatively quiet week, only a couple of small lots were sold to southern Europe, to traders, by a Ukrainian supplier, but at a considerably higher price than previous sales. A 10,000-tonne lot was booked at $680/tonne and a 5,000t lot at $685/t cfr, netting back to around $655-660/t fob Black Sea, Kallanish calculates.
Turkey is reported to be in the market, and with scrap exceeding $500/t cfr for premium HMS 1/2 80:20, may also take time to haggle, having booked the last pig iron lots at $620-630/t cfr. Offers remain at higher, in line with southern Europe levels of at least $700/t cfr, based on Turkish finished products prices and scrap gains. But buyers are resisting, aware of Chinese developments and US buyers’ stance, as well as short lead times with June loading tags.
Even bigger pressure is presented by Donetsk pig iron re-appearing in the market. Two months’ worth of this was booked by traders at a wide range of $540/t and $630/t fob for May and June production, respectively, for the Italian market. A total of up to 80,000t was booked and will be delivered starting in mid-summer, traders note.
In the US, the standoff continues with buyers on the fringes of the market back to roughly the same price idea as two weeks ago – $630-640/t cfr. Several sales were being discussed when Chinese prices were rising, but they appear to have been abandoned after the Chinese futures downturn and government intervention to cool the market.
Sellers persist with offers ranging from $690-750/t cfr Nola, depending on the supplier. Given the sentiment for scrap prices remaining on a rising arc, it is unlikely sellers will reduce offers, unless there is a drastic reduction in finished steel or feedstock prices, traders say. A few Brazilian cargoes were heard changing hands at $620-630/t fob during the past week, mainly below initial offer levels.
Although China’s interest has faltered somewhat, an Indian June-shipment cargo was booked at $640/t cfr, with more being negotiated. India is also offering to the US, at $680-690/t cfr, sources observe.
Export tax could stunt EU scrap market: BDSV
German scrap association BDSV has expressed its concern over the possibility of the European Commission imposing a tax on EU scrap exports.
During a EUROMETAL webinar on Thursday attended by Kallanish, BDSV manager Daniela Entzian said the effects of an export ban or tax “will be severe for us. With an export tax we wouldn’t have a level playing field”.
Scrap is traded as waste and a secondary raw material with strict treatment regulations. Entzian does not expect that a tax will be imposed by the EU’s trade department but sees more restrictions possibly coming from its environment department. The European Commission is revising waste shipment regulations, she says. The review will aim at restricting exports of waste that has a harmful environmental impact in third countries.
“Some politicians think that by keeping steel scrap in Europe, more steel scrap will be used and recycled in Europe, but we feel that the contrary might be the case,” Entzian observed. “This [scrap export restriction] would create a situation of lower prices and fewer incentives to collect and recycle.” If European exporters are not able to sell to large importers like Turkey, it would have a negative impact on their prices in Europe and it would be hard for member states’ scrap companies to remain financially strong, Entzian warned.
Germany exports over 80% of its scrap production to European countries and 16% to third countries. The largest buyer of German scrap is the Netherlands, followed by Italy and Belgium in third place. The Netherlands and Belgium export large tonnages of scrap to other non-European countries. About 20 million tonnes/year of scrap is exported from Germany. With 22.6m t/y, the EU remains the world’s largest scrap exporter followed by the US with 16.9mt, Kallanish notes.
Sources in the market believe the lobby of European steelmakers will manage to convince Brussels to implement a tax on scrap exports. The quest to curb scrap shipments stems from producers’ fears that China may buy massive scrap tonnages from Europe.
Natalia Capra France