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The export price of Russian pig iron has returned to growth after several months of decline. This follows from the data of the industry agency Metals & Mining Intelligence (MMI), which was reviewed by Vedomosti. The price has been declining since mid-March 2023. It follows from the MMI data that the minimum cost this year was fixed on July 24 – $330/ton on the basis of FOB ("with loading on the ship") Turkey. As of August 21 (the latest available data), the quotes increased by 6% and reached $350/t.

The materials note that there is no high demand for Russian cast iron yet. Indicative quotations of cast iron in Turkey are estimated at $370-375/t on the basis of CFR ("delivery to the port") or $350/t FOB Black Sea, and quotations of the offer for Russian cast iron are about $10/t higher. According to MMI, one of the shipments of Russian cast iron was contracted at a price of $400/ton in the ports of the Black Sea. Prices for Russian cast iron for Italy are estimated at $330-340/t FOB Black Sea.

In the domestic market of Russia in August, pig iron prices have not yet shown strong growth – from July 24 to August 21, they increased from 28,750 to 29,000 rubles/ton (+0.9%) on the basis of FCA ("loading on the seller's transport at the specified location") of the Russian Federation. In the materials of the MMI, it is noted that in the conditions of the rise in the cost of steel scrap in Russia, consumers using cast iron as a substitute (replacement) of scrap "agreed to an increase in prices." The cost of scrap in the domestic market has also increased since the end of July – by 3-4% to 29,882 - 31,416 rubles/ton.

At the same time, already in September, according to the forecasts of MMI experts, suppliers of cast iron may raise prices in the face of a rise in the price of cast iron in the world and a weakening of the ruble against the US dollar, as well as a rise in the price of scrap steel in Russia. The MMI does not specify how much prices may rise. Dmitry Smolin, Senior analyst at Sinara Investment Bank, predicts an increase in export prices for pig iron in the range of 15-20% by the end of 2023. "amid signs of improvement in the Chinese economy." According to him, a similar increase is expected in terms of steel prices. According to MMI, the export price for Russian steel (hot rolled steel) has not changed since the end of July and is $530/ton on the basis of FOB Black Sea.

According to MMI, 3.84 million tons of pig iron were exported from Russia in 2022. Exports went to Turkey, USA, Italy, Poland, Latvia, South Korea, Japan and China.

The main exporters of pig iron last year were Ural Steel, Severstal, Industrial and Metallurgical Holding, Evraz, NLMK and Kosogorsky Metallurgical Plant. Vedomosti sent requests to these companies.

The European Union (EU) in March 2022, after the start of its own in Ukraine, banned the import of a wide range of steel products from the Russian Federation as part of several packages of sanctions. The list includes hot-rolled and cold-rolled steel products, long products, some types of welded and seamless pipes. In early October, the EU expanded the list by adding semi-finished steel products (slabs and square billet) to it, but these products will not be imported only starting from 2024. European sanctions do not apply to cast iron. But its deliveries there are now hampered by restrictions imposed directly against Russian exporting companies and their owners, as well as problems with interaction with European banks, insurers, shipowners and stevedores, a source of Vedomosti in one of the trading companies said in April this year.

From the beginning of January to the middle of March 2023, export prices for Russian pig iron increased by 23.3% to $465/ton, but then began to decline. Smolin notes that export prices for pig iron began to rise following world prices for iron ore and coking coal. "Since the end of June, prices for coking coal in Australia have increased by 16% to $256/ton, prices for iron ore raw materials have increased by about 19% to $112/ton in [the last] three months," he notes.

Dmitry Baranov, a leading expert of the Finam Management Management Company, expects a further increase in pig iron prices by the end of this year. But the growth, in his opinion, will be "stepwise" – that is, periods of growth will be replaced by short periods of price stabilization. The analyst adds that due to the reorientation of the supply of metallurgists' products to the Asian market, its cost is also affected by the increase in logistics costs.

Source: https://www.vedomosti.ru/business/articles/2023/08/29/992505-rossiiskii-chugun-nachal-dorozhat?utm_campaign=newspaper_30_8_2023&utm_medium=email&utm_source=vedomosti