Rusmet.ru, Victor Tarnavsky/ In October commercial iron market was not active. Consumers in all main markets such as Europe, USA, and Eastern Asia purchased small volumes and kept the stockpiles minimal. Besides, in recent weeks the price for conversion iron was rather high as compared with scrap. This did not further pig iron sales.
In Europe in October low capacities load of local steel producers were a problem for iron suppliers. In Italy and Spain most mini-mills work at 35-45% capacity load. In the south of Europe there is scrap excess which looks more competitive in terms of the price.
Nevertheless some companies from EU and Turkey in the middle and the second half of October concluded contracts for iron supplies in December and January. According to analysts metallurgical raw materials market is close to the decrease extreme point. That is why the prices should grow in November. Besides, European metallurgists which reduce their expenses in the end of the year will have to resume the purchases in order to refill the stockpiles.
The price of Ukrainian iron in Suthern Europe in the second half of October is $430-435 per ton CFR, the price of Russian iron is up to $445 per ton CFR. The demand was rather low. However, there was not excessive supply. Russian company Tulachermet which is the largest exporter of commercial iron in the country, announced in mid-October temporary stop of sales to the domestic market. The sales resumption is scheduled for November. Ukrainian plant Donetskstal has also terminated iron export and stopped for repair works.
At low demand in Europe, Russian and Ukrainian iron in October is sold to the USA. The prices there were rather low (about $430-450 per ton CFR). The exporters from northern Brazil offer iron to the USA at $420-425 per ton FOB ($440-445 per ton CFR New Orleans). However, the shipment costs of South Brazilian companies are higher. Some Southern Brazilian companies offered iron to Eastern Asia at $385-390 per ton FOB ($445-450 per ton CFR). But most companies preferred to stop production at all. In October the average level of capacities load amount not more than 25-30% even in the North. In the South this figure is higher.
Brazil seems to leave “iron business”. It is more profitable for local companies to export iron ore or steel rather that iron to China and other Eastern countries. Thus, Vale almost stopped sales for foreign market. There is need neither for iron nor for scrap in the USA market. But in case of steel output increase to the before-crisis level the shortage of both materials can appear.
Generally commercial iron suppliers that remain in global market do not very much suffer from the current situation. During recent month the prices for this material dropped by $10-15 per ton. In November they are expected to grow. The pause taken by the buyer is coming to an end. According to traders many consumers are already planning large purchases with delivery after the New year holidays.