Italian pig iron prices are expected to continue to increase significantly in the coming days, as a result of shortages. This comes as the Ukrainian ports of Mariupol and Odessa come under siege from the Russian military.

Anticipated shipping disruptions from Ukraine and future sanctions on Russian steel and raw materials exports are also expected to discourage Italian buyers from purchasing in the CIS, a major pig iron supplier to Italy, sources tell Kallanish.

Because of pig iron shortages from the CIS, an Italian purchase of Brazilian pig iron was heard at the beginning of February. A distributor who buys directly from producers to replenish stocks at Marghera, the main Italian steel port, is said to have bought a large, 35,000-tonne Brazilian vessel at $540/tonne fob Brazil. Some limited Ukrainian and Russian pig iron tonnages of between 7,000t and 15,000t are being sold in Italy at $610-615/t cfr Italy, sources observe.

The war in Ukraine is expected to cause a substantial change in the way Italy procures pig iron. Now that Ukrainian material is surrounded by uncertainty, and sanctions on Russia become a reality, more Brazilian prig iron is expected to be sold into Italy. It remains unclear whether the self-proclaimed Donetsk Republic, now recognised by Russia, will return as a regular pig iron supplier after the EU banned trade with the breakaway regions.

Material in consignment at the Marghera port has dried up and demand from distributors who buy directly from CIS producers to replenish the port’s stocks remains strong, Kallanish notes.