U.S. Grey Cast Iron Prices Edge Down Amidst Mixed Feedstock Supply at the End of December 2022

Grey Cast Iron prices in the US fell at the end of the fourth quarter of 2022 due to a mixed supply sentiment for raw material pig iron. Lower pig iron supply and plunging US demand outlook could offset the Grey Cast Iron market in 2023. Spot market cargoes of Basic Pig Iron (BPI) in the US may tighten in the first quarter of 2023 as crucial supplier Brazil will recover from a wave of production shutdowns. However, Grey Cast Iron market participants expected some pressure on US pig iron volumes in the first months of 2023 as Brazilian suppliers look to catch up following holiday and maintenance shutdowns.

According to our sources, market participants expected Grey Cast Iron demand to fall throughout January 2023. Some players are concerned that the first quarter of 2023 will take several weeks to develop, as it did in January 2022. Furthermore, Brazilian pig iron manufacturers curtailed 70,000 MT/month of production capacity earlier this month for maintenance. The country is expected to shut down another 70,000 MT/month before the year's maintenance end, idling more than 50% of production until March.

US Grey Cast Iron buyers are still working through some inventories of higher-priced Brazilian raw material cargoes bought in the wake of the Russia-Ukraine War. Spot market BPI prices have declined by 47% from April to mid-December as consumers locked in long-term contracts, alternative suppliers stepped in, and Grey Cast Iron prices began to fall. Still, shipments from atypical sources like India are expected to remain limited despite the country's removal of a 15% export duty in November. India typically offers pig iron with a phosphorus content above 0.12%, making it less favorable.

Furthermore, Grey Cast Iron demand and prices for most US steel mills have also declined, cutting into consumption rates for the raw materials. US steel capacity utilization rates have gradually declined over 2022, hitting 73% in the week ending 10 December, down from 80% a year earlier, according to the latest American Iron and Steel Institute data.

According to ChemAnalyst, the Grey Cast Iron market is expected to remain sluggish in the first quarter of 2023. Despite the forthcoming drop in pig iron supply, some players predicted that any support from supply reductions would be offset by weakened US Grey Cast Iron demand. Even though some smaller consumers are expected to be active in the spot market in Q1 2023, major US Grey Cast Iron mills are mostly covered on volumes throughout the first quarter and even through April 2023, owing to a shift toward increased scrap consumption.