US pig iron prices in flux amid Ukraine crisis

US pig iron import prices have surged this week as Black Sea supply has evaporated following Russia's invasion of Ukraine, and alternative sources and materials remain in question.

Market participants have been unable to pin down prices this week, with estimated values climbing by the day in the absence of firm trade. Offers last week started around $600/t cfr New Orleans, but have increased to as much as $750/t, according to some market participants. Prices at that level would be the highest in Argus price history dating back to 2016 and surpass the high of $672/t cfr New Orleans reached in June 2021.

"No end to the bullishness and the scare of unavailability," a US market participant said.

The Russia and Ukrainian conflict has essentially cut off Black Sea pig iron supplies, stranding some vessels that had yet to sail and preventing new sales. Ukrainian pig iron production has been idled and port operations suspended because of the Russian invasion.

Though Russian pig iron producers are operating, a lack of financing amid the specter of potential bank sanctions from the country has curbed any new supply from reaching the market.

With Russia and Ukraine accounting for 60pc of US pig iron imports, consumers are turning to Brazil to pick up the slack but finding minimal relief because of a lack of additional capacity.

Prices from Brazil have been further complicated this week with many in the market out for Carnival celebrations.

US steel mills will lean on what appear to be healthy pig iron inventories for the next 30-45 days, with future supply more in question. Argus estimates US ports received 551,500t of pig iron in January and 470,000t in February, compared with a 2021 monthly average of 487,000t. Vessel tracking data showed an estimated 260,000t of pig iron in transit to US ports for March arrival, including 90,000t from Russia and 70,000t from Ukraine.

By Christian Willbern and Blake Hurtik