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Cleveland-Cliffs plans to price HBI with pig iron as reference

Highlights

Cliffs working on HBI value-in-use with pig iron quality

Cliffs sees demand for HBI to replace US pig iron imports

HBI plant will use single source of DR pellets

London — US miner Cleveland-Cliffs said it will start selling hot-briquetted iron (HBI) from its new plant in Ohio in a few months as planned, and will price HBI using blast furnace pig iron as a reference.

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Cliffs plans to offer HBI and help US electric arc furnace steel mill buyers expand their low impurity iron metallics supply, which can increase the range of steel qualities offered.

The US HBI may replace Russian and Ukrainian pig iron, said Cliffs CEO Lourenco Goncalves in a call to analyst Thursday.

The Platts imported pig iron delivered assessment price to the US Gulf, which takes into account pig iron trade from the Commonwealth of Independent States and Brazil, averaged at $346.50/mt CFR New Orleans in January.

The Eastern European countries ship basic-grade and nodular pig iron produced from blast furnaces, with the US becoming a growing market.

US steelmaker Nucor and Austria's Voestalpine developed North American HBI and DRI plants to supply US and Mexican mills.

The Cliffs HBI plant in Toledo, Ohio plans to use delivered pig iron pricing in the US as a reference, with price adjustments agreed with customers on the HBI quality variance with pig iron, Goncalves said..

Cliffs plans to produce HBI with 3% carbon content and low silica, and with high metallization rates.

HBI pricing and later contracts will measure value-in-use with pig iron, and consider "a lot of gives and takes, that will be defined by the values, but the values will be developed after," he said.

"So we are going to have six months or seven months between June and December of 2020 to be adjusting these parameters," Goncalves said.

When Cliffs starts to deliver HBI, the company will take into account typical US pig iron trade, where buyers tend to buy on a short-term order basis, with loosely agreed terms for tonnage for the quarter, and pricing set on a monthly basis, he said.

Cliffs plans to use 2.8 million long tons/year of pellets for its HBI plant from 2021 onward and will produce more DR-grade pellet.

The Midrex HBI plant in Toledo will benefit from a single source of iron ore pellets coming from Cliff's Northshore operation, Goncalves added.