Lower Venezuela HBI prices see volatility in exports

BRAZIL July 03 2016 9:01 PM

BRASILIA(Scrap Register): July bookings prices for Venezuelan hot-briquetted iron fell this week, following slumping Turkish scrap prices and with volatility at the lower price range, market sources said.

Platts Friday assessed July bookings of Venezuela HBI at $130-$150/mt FOB Venezuelan ports, down $15/mt from June bookings ($145-$165/mt).

Three deals were inked in June for 26,000 mt, 28,000 mt and 30,000 mt of HBI in the past weeks, sources said. Two vessels were sold to Europe, while another was directed to Central America. All three were deals closed with Ferrominera Orinoco's (FMO) HBI. Prices negotiated were $130-$140/mt FOB.

In a statement, President Ivan Hernandez of HBI producer Comsigua said the material passed to traders at $132/mt FOB, down nearly $200/mt from 2012 levels of $329/mt FOB.

A Venezuelan distributor said prices are being negotiated at $130/mt FOB, but noted that it could go lower if dealing direct with producers.

"FMO and Comsigua were offering at low prices, but then you'd have to also pay a percentage of commission," he said.

According to sources, production has been low in the country due to the lack of pellets, energy constraints, low bids and very low international prices for exports.

One Venezuelan trader offered a minimum quantity of 25,000 mt of HBI or a maximum 50,000 mt, with a contract period of one year renewable. "The delivery period is 30 days after payment. The expected price is $140/mt FOB, but it is subjected to change depending on the contract date," he said.

A Panama seller offered 50,000 mt for $130/mt FOB. One Canadian trader said he has 90,000 mt available per month, to sell FOB or CIF basis, with no intermediate.

"We are direct with the factory in Venezuela," he said, offering at $140/mt FOB.

A US trader offered 20,000 mt at $140/mt FOB of HBI from Ferrominera Orinoco, and detailed the process to acquire the material: "First send a mandate letter issue to FMO with a brief introduction of the company, the monthly quantity needed, port and country of destination, and purpose of the product," he said.

The $140/mt was seen other seven times during the survey, with quantities varying from 20,000 mt to 30,000 mt.

Another Panama trader offered 50,000 mt for a 12-month period for $150/mt FOB.

"We are not the producers but we have a society with them which means we are the end-sellers," said the Panama trader. Other five traders offered 30,000 mt for $150/mt FOB.

A source said Italian consumers were shying away from Venezuelan HBI in favor of Turkish scrap due to lower price and shorter lead time. Turkish scrap prices have fallen significantly since early-May levels of $330/mt to an average of $215/mt CFR last week.

Sources said Turkish scrap prices are stuck in a downward spiral at the moment, due to finished product demand and volatility in Chinese export prices spooking a lot of people in the deepsea market, which is also affecting HBI merchant market in Venezuela.

An Indian source noted the difficulty in trying to procure Venezuelan HBI. "With the recent turmoil in the Venezuelan economy we are ourselves a bit apprehensive about finding material from credible suppliers who have the resources to perform timely shipment with quality material," he said.

US sources said the Venezuelan HBI export market remains minimal and may be feeling its latest year of importance in the international market, as Voestalpine is signing foreign distribution deals for HBI from its 2 million mt/year facility in Texas.

Voestalpine will annually supply about 800,000 mt of HBI to its steelmaking facilities in Linz and Donawitz, Austria; 400,000-700,000 mt to Mexico's Ahmsa; 150,000 mt to Tyasa, also in Mexico; and 240,000 mt to Big River Steel in the US.

"This facility, along with Russia's Metalloinvest starting up of a HBI plant in Lebedinsky, will spell the end of the Venezuelan HBI export market that relied on Mexico and Europe markets," a trader said.