Steelmaker SDI says to halt Russian pig iron imports after May cargo

A cargo of Russian pig iron sailing to Mobile, Alabama, and destined for Steel Dynamics Inc. is the last in a supply contract since nullified by SDI in a declaration of force majeure, the steelmaker has told S&P Global Commodity Insights.

The 56,810 dwt Marshall Islands-flagged ore carrier LMZ Vega shipped out of Novorossiysk, Russia, on April 16 with the cargo and is set to arrive in May 10-13 in Mobile, according to Platts' cFlow ship and commodity tracking software.

S&P Global reported April 29 that a US buyer had booked the first cargo of Russian pig iron since mid-March, but the buyer could not be confirmed.

The US and other countries have responded to Russia's Feb. 24 invasion of Ukraine with economic sanctions, including an import ban on multiple raw materials, though Russian pig iron has not been banned.

Fort Wayne, Indiana-based SDI, in response to Russia's war in Ukraine, was reviewing its options regarding its contracts with Russian pig iron producers when the cargo was shipped, a spokesperson said.

"We are disputing a contract with one of these producers and have communicated force majeure on the remaining shipments," SDI's Tricia Meyers said in a email. "However, the shipment arriving mid-May 2022 was shipped during the period of time when we were determining our options regarding contract cancellations."

Russia was the top exporter of pig iron to the US at 2.07 million mt in 2021, but the US has not received a pig iron cargo from Russia since 53,200 mt of Russian pig iron arrived in Charleston, South Carolina, on March 17, according to Panjiva, the trade analysis unit of S&P Global Market Intelligence, SDI has used the Novorossiysk-to-Mobile route extensively to bring Russian pig iron for use to its Columbus, Mississippi, electric arc furnace, including a 48,651 mt cargo that arrived on March 3 and a 50,341 mt cargo that arrived on Feb.12. In 2021, there were eight identifiable cargoes of pig iron shipped to SDI using this route, totaling 418,791 mt, with the listed shipper identified as Russia's Metalloinvest Trading, according to Panjiva data.

SDI CEO Mark Millett said April 21 that the company was able to cover its pig iron needs for the rest of 2022 by sourcing from Brazil and India, while also lowering overall pig iron requirements to about 14% of the mill input compared to the typical level of 22% by developing a higher-quality scrap mix.

"We are currently in the process of pursuing opportunities to become even more pig iron self-sufficient for the future," Millett said during the company's first-quarter conference call.

The disruption to Russian and Ukrainian cargo flows caused pig iron prices to surge from $563/mt CIF New Orleans on Feb. 18 to a multi-year peak at $1,030/mt on the same basis on March 18. Platts' last weekly pig iron import price assessment $940/mt CIF New Orleans on April 29.