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Venezuelan HBI prices drop $5/mt under pressure

Sao Paulo — Venezuelan hot-briquetted iron export prices decreased to $240/mt FOB as a response to weaker international prices and rising logistics costs, sources said Friday.

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S&P Global Platts' weekly Venezuelan HBI export price assessment Friday dropped $5 to $240/mt FOB, based on a range of bids and offers ranging $235-$245/mt. Last week's price was $245/mt FOB, based on a range of bids and offers of $240-$250/mt.

CFR European port prices were cited between $315/mt and $320/mt, sources said.

Nevertheless, prices are unclear, sources said, with no new cargoes offered in the week, while expectations for the next cargoes could be even lower.

Traders are also concerned over the quality of the material.

"The quality of the material has not been the best. It is good, but not what you expect. If you're buying HBI you expect for the best quality and you're not receiving," a trader said. "The material is sometimes sitting for a couple of weeks waiting for more volume to complete a cargo, and that decreases its quality."

Traders continuously said the lack of pellets is the greatest issue in the Venezuelan market. "Several promises supply, but it seems no one has volume to deliver," another trader said.

The high cost of the Orinoco River Toll (ORT), currently at $13.75/mt, is also pressuring prices to be at lower levels. "Final price including these taxes plus freight would be very hard to sell in Europe," a third trader said.

The Orinoco's region's export activity was quiet in the third week of July, according to industry sources and port agency data.

No new vessels berthed on the Palua port.

The Sozon vessel berthed on the Palua port on July 11 from Spain. The vessel left on July 17 with 29,010 mt -- sources said the material could be mix of HBI and direct-reduced iron (DRI-B).

A second vessel, the Bulk Destiny, reached the Orinoco region from Brazil on July 12 to load HBI. According to traders, the vessel is also loading a mix of DRI-B and HBI.

The Norway Pearl berthed on the Palua port on June 30 and loaded HBI from Orinoco Iron, according to sources. It left port on July 5 and reached Port of Mobile, Alabama, in the southeastern US, on July 14.

No more vessels are expected to reach the Orinoco region next week.

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

Of Venezuela's five HBI producers, only two -- Orinoco Iron and Venprecar -- are currently operating, albeit at reduced rates. BriqVen, Comsigua and Ferrominera's facilities are offline. Ferrominera and BriqVen expect to resume operations in July.

The draft of the Orinoco River -- below nine meters -- has continued to affect loading procedures and freight costs. Vessels could not load full cargoes, and top-off could be needed. This situation reduces intake and increases freight costs, sources said.

Local traders did not offer any cargoes for immediate shipping, according to an S&P Global Platts survey.

Traders were contacted in Venezuela, Central America, the US and Europe.

--Guilherme Baida, guilherme.baida@spglobal.com

--Edited by Derek Sands, derek.sands@spglobal.com