Seaborne pig iron market is possibly heading to a bearish mode on news of recent scrap exports from China.
It may be noted that Chinese government is planning to root out scrap based furnaces in order to control pollution. There is no exact number, but capacity is estimated to be around 80-100 MnT.
This will possibly initiate scrap exports from China in near term. According to participants, some scrap exports have recently been reported to Vietnam at around USD 260-265/MT CFR, despite 40% tax on scrap exports from China.
Bearish sentiments in pig iron market
“Seaborne pig iron trade likely to remain low despite the fact that supply of pig iron is limited across the world. Difference between scrap and pig iron is quite high, pig iron being expensive. Buyers will not pay such high premium for pig iron over scrap.” said a trader based in Dubai.
Current offers for steel grade pig iron from CIS region is assessed at around USD 300-310/MT FOB Black Sea. This is equivalent to USD 330-340/MT CFR South East Asia. Whereas scrap is at around 270-280/MT CFR South East Asia, he further added.
As China’s inventory of end-of-life automobiles, appliances and obsolete buildings grows, steel and scrap industry analysts have predicted that the nation could soon become a significant net exporter of ferrous scrap. While the 40% duty does not prohibit ferrous scrap exports, it does make such shipments unprofitable in many cases.
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