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Venezuela HBI prices remain unchanged amid political instability

Sao Paulo (Platts)--14 Sep 2018 1136 am EDT/1536 GMT


Venezuelan hot-briquetted iron export prices were unchanged during the second week of September as political instability caused concern among traders, sources said Friday.

S&P Global Platts' weekly Venezuelan HBI export price assessment held at $235/mt FOB on Friday.

The FOB price equates to around $310-$315/mt CFR European ports. According to traders, for HBI to remain competitive, prices on a CFR basis must be below Turkish imported scrap prices, which were at $319.50/mt CFR HMS 80:20 basis on Thursday.

Turkish mills finished their September bulk scrap bookings and have begun October negotiations. Market sentiment ranged from bullish based on mills' October booking needs to bearish based on a weak finished steel market.

European pig iron prices were reported to Italy and Turkey up to $390/mt CIF Turkey or Marghera in Italy. Both countries are major buyers of HBI.

According to a market player, Venezuela's price "is significantly lower than the one of other market participants, as the consumers cannot rely on this sort [limited] of supply." He also noted the premium Russian HBI would command over Venezuelan material.

He said material could be sold in the market as high as $345/mt FOB, or $370/mt CFR Mexico to $380/mt CFR Turkey.

VESSEL FLOW

The Orinoco region's export activity was limited in the second week of September, according to industry sources and port agency data.

The latest vessel to berth in the Orinoco region was the Sirina. It loaded direct-reduced iron (DRI-B fines) from Sidor.

In mid-August, because of political issues, the Livadi vessel had to discharge HBI from Orinoco Iron as it was not authorized to load the cargo. It berthed on the Palua port on August 13 and waited in the port for further negotiations.

After discharging, the vessel was again open for business, and a different trader who, according to a source, "had all the contracts and required authorizations by the central government in place," booked the distressed vessel as a new cargo of HBI. It completed loading Tuesday and is expected to arrive in Algeria on September 26.

Other vessels that arrived during August were the the Bulk Trident, which berthed on the Palua port on August 28 to load HBI and left on September 2, headed to Trinidad & Tobago, which it then departed on September 8. Its final destination is Rotterdam, where it is expected to arrive September 23.

The Sweet Lady III departed on August 28 with 31,660 mt of HBI. The vessel reached Gibraltar, Spain, on September 12. The Elena Topic left the Orinoco region bound for Rotterdam. It was loaded with direct-reduced iron fines and it is expected to reach its final destination by September 14.

Vessels that have recently loaded were combining cargoes from various HBI producers to reach a minimum 20,000 to 22,000 mt, sources said.

CHALLENGES FACING THE MARKET

International macro factors, continually rising logistics costs, political instability and limited credit availability continued hampering the Venezuelan HBI sector. As a result of the instability in relations with the US and some European governments, most banks are currently unwilling to take the risk of making credit available for Venezuelan deals, and those that are still doing so charge more.

The Orinoco River Toll (ORT) has also jumped year to date from $3.44/mt at the beginning of the year to $16/mt.

The draft of the Orinoco River -- below nine meters -- has continued to impact loading procedures and freight costs. Vessels have been unable to load full cargoes, and top-off could be needed. This reduces the intake of vessels, causing a considerable increase in freight levels as Handymax and Supramax vessels depart short-loaded.

According to traders, 22,000 mt is the highest volume a vessel can currently load in Venezuela. Traders were contacted in Venezuela, Central America, the US and Europe.Local traders have not offered any cargoes for immediate shipping, according to a Platts survey. --Guilherme Baida, guilherme.baida@spglobal.com --Edited by Jennifer Pedrick, jennifer.pedrick@spglobal.com




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