Nearly three months since its onset, the war in Ukraine is continuing to impact U.S. metal and scrap prices, according to industry experts.
U.S. imports of metals, primarily pig iron, have been halted or slowed down, causing demand and price fluctuations for steel scrap.
Some two-thirds of the pig iron imported into the United States last year came from Russia and Ukraine, according to the U.S. Census Bureau. The February Russian invasion of Ukraine brought those shipments to a halt, causing pig iron prices to surge. U.S. steelmakers who use pig iron as a raw material looked for new suppliers and more high-quality steel scrap.
Pig iron, sometimes called crude iron, is an intermediate product of the iron industry in the production of steel. It is made by smelting iron ore in a blast furnace. Pig iron is supplied in a variety of ingot sizes and weights. It is not a saleable product on its own but is rather an intermediate step in the production of cast iron and steel. The product got its distinctive name from the traditional shape of the molds used to form ingots. The molds were a branching structure formed in sand, with many individual ingots at right angles to a central channel of hot metal. The molds resembled a litter of nursing piglets, hence the name pig iron.
Pig iron is mixed with scrap in electric arc furnaces and melted into new steel. A recent Wall Street Journal article reported that about 70 percent of steel produced in the U.S. is made in electric furnaces, making the U.S. particularly reliant on scrap steel and pig iron. U.S. pig iron imports last year were about 20 percent higher than in 2019, according to the article.
In the midst of the pig iron price increases, steelmakers in the United States are using more scrap steel. In April that demand increased the price of high-quality steel scrap 51 percent higher since February. According to the Wall Street Journal article, some U.S steel producers have been obtaining pig iron from Brazil or India and also improving their scrap processing operations. The article quoted an executive from Indiana-based Steel Dynamics who reported that their pig iron consumption has been reduced as the company does a more thorough job of removing copper and other metals from its scrap to upgrade its quality.
Pig iron is not the only metal impacted by the war in Ukraine. Russia is also the world’s third largest producer of nickel and the world’s largest exporter of refined nickel. Since the war started, buyers in the United States and Europe have been seeking alternatives to Russian nickel, and this has impacted the domestic nickel and stainless steel markets. Industry analysts forecast that these dramatic price increases may start to subside due to a variety of factors, nonetheless, they say the rollercoaster volatility will continue until the war comes to an end.
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