Brazils domestic pig iron tags will likely come
under pressure after a second export deal for 50,000 tonnes of
pig iron from Brazils southeastern Minas Gerais state,
Prices in Minas Gerais
have been stable at some 740 real ($313) per tonne ex-works the
past few months but could rise in the near future on lower
supply and the devaluation of Brazils currency.
"Producers will have
more bargaining power," one local trading source said Aug.
about 100,000 tonnes sold within one montha volume that
wont be available to Brazilian steelmakers," a second
Minas Gerais pig iron
producers sold the 50,000-tonne cargo to a trading company
after a similar deal around the end of July to early
The first sale was at
$378 per tonne f.o.b., and the second at $375 f.o.b., mainly
due to a more favorable exchange rate for exporters.
At the same time,
utilization rates in Minas Gerais remain depressed at about 30
percent of installed capacity, and so far there is no news
about restarting idled blast furnaces.
But a shift from
normal payment terms could favor Brazilian steelmakers. Mills
typically pay merchant pig iron producers within one day of
delivery of the cargo. But in these two export transactions,
payment by the trading company that bought the cargoes will be
made upon receipt of the bill of lading.
"This means payment
will probably be made within 10 to 15 days from the shipment of
the cargoes," a source said.
Brazilian pig iron
export deals normally have producers receiving several payments
for a single transaction.
"They transport their
cargoes in portions to railway stations and get 85 percent of
the value of those volumes as soon as they reach the stations,"
the source said. "This way, they have working capital to
Gerais pig iron producers are soon expected to begin seeking
higher prices for product sold to local steelmakers.
"Well have to
wait and see what happens," a source said.
A version of this
article was first published in AMM sister publication Steel