NEW YORK — An increase in imports from South Africa of a raw material similar to nodular pig iron has triggered a fierce price war, with some U.S. distributors now considering removing pig iron from their sales programs.
The South African material is a by-product of titanium dioxide production using a process pioneered decades ago by Sorel, Quebec-based Quebec International Titanium (QIT), a wholly owned subsidiary of Rio Tinto Plc.
Chicago-based Miller & Co. LLC has been the exclusive U.S. distributor of QIT’s pig iron product, popularly called Sorelmetal, for many years but is now facing competition from a South African product known as "ticor."
Stamford, Conn.-based Tronox Ltd., which owns the South African mines that produce ticor, told AMM that it doesn’t own that name and refers to its product as pig iron.
"Roughly a decade ago, our KwaZulu-Natal Mine in eastern South Africa was part of a mining company named Kumba. At the time, some of the iron exported to the U.S. was referred to as ticor," Tronox said.
Although ticor has been produced for 10 years, sources say its U.S. availability has soared over the past year after Tronox picked Charlotte, N.C.-based Primetrade Inc. as its exclusive sales agent in the United States.
U.S. distributors of nodular pig iron produced in Brazil claim Primetrade, which is paid a commission for each sale, has managed to undercut prices of the product by anywhere between $25 and $100 per gross ton. Raw material buyers at foundries that consume the material confirmed the price differences.
Sources at some distributors and Brazilian producers said that while Sorelmetal historically has traded within $10 per ton of the price of Brazilian nodular pig iron, Primetrade’s low sales prices for South African pig iron have forced a price war that is allegedly making the latter trade unviable.
Primetrade also can offer better pricing due to its commission-based structure with Tronox, which means it doesn’t have to take a position on the material and assume any risk, which distributors of Brazilian nodular pig iron are obligated to do, sources claimed.
One source said that Tronox and Primetrade increased their volumes to the United States this year because sales to Europe dropped due to its struggling economy.
However, a Tronox spokesman said overall demand from U.S. foundries increased this past year. "At present, the main drivers for exports are quality and demand. The demand in the U.S. market over the last 12 months was for higher-quality iron, which resulted in more tons being shipped," he said.
Spokesmen for Tronox and Primetrade said their companies wouldn’t comment on specific pricing, speculative statements or unsubstantiated allegations.
U.S. sellers said they are now considering withdrawing from nodular pig iron distribution. A source at one Brazilian producer confirmed that several U.S. distributors had expressed their intention to step away from the product.
"If the importation and pricing of the Tronox material continues, it will drive several stockholders out of the (nodular pig iron) distribution industry," another source said. "It will also eliminate or greatly reduce the number of Brazilian pig iron companies which will produce (the product), as there are only five left now and one is close to closing."
Sources claimed that Tronox and QIT wouldn’t be able to cover the supply gap if the Brazilian supply of nodular pig iron ceased. The market is estimated at a total of 300,000 to 400,000 tonnes per year.
"Where will the U.S. nodular foundry industry get sufficient supply of this critical material? After demand improves in Europe and Asia, and Tronox regains those markets, will they continue to export heavily to the U.S.?" one source asked.
U.S. nodular pig iron buyers said they were booking larger volumes of the Tronox material because it fits their needs and significantly lowers their cost.
"I need to look out for my company’s bottom line," one buyer said. "If the product meets our specification and costs less, that’s all I’m concerned with."