Posted on 30 Oct 2024
Pig iron demand is returning in Italy, with sources expecting contracts to be signed within the next few days. Several buyers are in need of placing orders for delivery in December and January, particularly distributors and traders who report reduced inventories of pig iron.
The volume of imported pig iron from Russia will be limited by a smaller EU quota in 2025, and customers are looking for alternative sources of supply. They are currently negotiating contracts with Russian producers who are allowed to sell in Europe, whereas Ukrainian suppliers are not quoting. Previous Ukraine-origin quotes were approximately $15-20/tonne more expensive than Russian material, Kallanish notes.
An important Italian buyer is rumoured to be negotiating to procure about 200,000 tonnes of supply or more from Russian producers at a price below $400/t cfr Italy, but the likelihood of conclusion remains unclear. If this agreement is completed, the price is likely to serve as a benchmark for the Italian market.
No contracts have been struck in Italy in the last two weeks. Distributors who buy pig iron directly from Russian producers are evaluating pricing possibilities.
One Italian seller describes an increasingly difficult scenario with domestic foundries. Due to reduced consumption, most Italian foundries are operating at half capacity. The market is starting to see bankruptcy filings, as well as payment delays and defaults. Certain foundries are now required to pay in advance when purchasing pig iron.
The most recent transactions carried out by Italian distributors with Russian producers occurred within an average range of $410-420/t cfr Italy. Sellers expect that future transactions for limited quantities will range between €380-400/t, depending on the buyer and volume.
The EU quota for Russia-origin pig iron imports will shrink to 700,000t in 2025, with a complete ban on these imports to follow from 2026 (see Kallanish passim).
Source:Kallanish
