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Brazil producers sell low-phosphorous pig iron to US

Keywords: Tags  Brazil pig iron, merchant pig iron, pig iron producers, pig iron sale, low-phosphorous pig iron, Juan Weik

SÃO PAULO — Merchant pig iron producers in southeastern Brazil recently reached a deal to sell low-phosphorous material to a U.S.-based steelmaker for the first time in several months.

"The deal has been reached but there are still no details about the final volume," one source involved in the negotiations said.

At least 50,000 tonnes of Minas Gerais pig iron with a maximum 0.1-percent phosphorous content are expected to be shipped to the Port of New Orleans at the beginning of November for $405 per tonne c.f.r., several sources in Brazil and the United States told AMM sister publication Steel First Sept. 11.

"There may be more material to be added to the cargo, so in the end it could be a Panamax vessel with as much as 70,000 tonnes instead of a Handymax with 50,000 tonnes," the source involved in the negotiations said.

The f.o.b. price will therefore vary according to the vessel and its corresponding freight rate, but it is expected to be somewhere between $375 and $385 per tonne, different sources said.

"The price in the U.S. has now stuck at $405 per tonne," one U.S. trading source said.

Some producers are asking for as much as $408 to $410 per tonne c.f.r., which is "pretty ambitious," a second U.S. trading source said.

The $405 c.f.r. price is the same achieved a couple of weeks ago by producers from Brazil’s northern region of Carajás for October shipment for the same grade material.

Minas Gerais-origin pig iron usually has a higher phosphorous content—as much as 0.15 percent—which isn’t accepted by the majority of U.S. steelmakers. Nucor Corp.’s Hertford County, N.C., plant is considered one of the few to use this type of material in the country.

But sources don’t expect deals for low-phosphorous Minas Gerais pig iron to the United States to become common in the near term.

To begin with, there is limited port capacity in Brazil’s southeastern coast, which in the case of pig iron consists mainly of the Rio de Janeiro port and Terminal de Produtos Siderúrgicos (TPS).

Another option could be the Paul Gusa terminal at Vitória port, which is near TPS, but there is still no customs authorization to use the facility.

There is also limited supply of high-quality, low-phosphorous lump iron ore in Minas Gerais, which is necessary for the production of low-phosphorous pig iron.

"I don’t know if the (Minas Gerais) producers will be able to produce that much volume of 0.1-percent phosphorous pig iron," a source at a Carajás pig iron producer said.

A second Carajás producer agreed. "I don’t think they will become competition for us," he said.

Most of the Minas Gerais pig iron output is sold domestically to Brazilian steelmakers.

Independently of how many other export transactions will be closed over the coming months, the fact is that the Minas Gerais pig iron market hasn’t been as busy as it is now for a long time.

"It’s definitely great news for the producers," a trading source said.

A version of this article was first published in AMM sister publication Steel First.

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