Black Sea merchant pig iron prices soared last week to keep up with the rally in coking coal and iron prices.
As high coking coal prices on an FOB Australia basis exceeded FOB Black Sea pig iron prices, many CIS exporters withdrew from the market to reevaluate their positions and give time for the market to settle, sources said.
The current relationship of CIS pig iron prices to coking coal prices is very unusual.
For most of their shared history (since September 2010), Platts FOB Black Sea pig iron index stayed roughly $150-$300/mt above the FOB Australia Prem Low Vol hard coking coal assessment. The premium started to shrink rapidly this summer and was obliterated in October.
Having been at parity, there are now signs pig iron is starting to tentatively rebuild its premium over coking coal.
The momentum in pig iron prices is expected to continue in coming weeks if suppliers return to the market with new offers. Some sources reported pig iron availability around $300-305/mt FOB Black Sea/Sea of Azov.
"We are selling January production at $300/mt FOB Black Sea and there are all signs of further hikes to $310-315/mt FOB," a European trader said.
A Russian trader was more cautions saying the last sales more than a week earlier had been closed at $305/mt CIF Italy, which netted back to $280-$285/mt FOB Black Sea.
At present, "mills are not in particular rush, their earliest availability is the end of December shipment," the trader added, expecting producers to remain on hold for a week or two in anticipation of stronger market.
A Ukrainian mill told S&P Global Platts it did not come to the market this week as planned. Earlier the company was considering asking $300/mt FOB but retreated to adjust its target price upward.
"They indicate $325/mt FOB. But they will offer firm next week. I believe they will get it," a Ukrainian trader commented. Another Ukrainian trading source also said $300-$310/mt should be realistic soon.
Platts assessed its weekly pig iron price at $290-$300/mt FOB Black Sea, indicating a mid-point of $295/mt FOB, $20/mt up on week.
