Venezuela’s HBI exports limited, industry continues to struggle

Venezuela, formerly the world's largest hot-briquetted iron (HBI) exporter, currently has only limited volumes available for export due to a lack of pellets and continuing technical problems, sources said this week.

Orinoco Iron is one of two HBI producers operating in Venezuela at the moment.

The company is able to continue producing HBI because it manufactures uses iron ore fines and does not require pellets from state-owned mining company CVG Ferrominera Orinoco (FMO) or Sidor, in contrast with the country’s other producers, Metal Bulletin understands.

Although, Orinoco Iron is operating at a capacity utilization rate of just 25%, its installed HBI capacity is 2.2 million tonnes per year.

Venprecar, which is able to produce 900,000 tpy of HBI, was due to restart production at the end of last week.

“[Venpercar] has an agreement with Sidor to supply it with around 90,000 tonnes of pellets in late July-August,” a source told Metal Bulletin.

According to the agreement, the company will produce two shiploads of HBI – one for itself, and another for Sidor.

And Venpercar is expected to be in a position to offer material to the market, most likely Europe, later in July.

However, in September Venpercar will have a planned shutdown lasting 45 days.

Metal Bulletin’s weekly price assessment for Venezuelan HBI exports was $295-300 per tonne fob on Friday July 13, widening downward from $300 per tonne a week earlier.

The import price assessment for HBI in Italy, the key consumer in Europe, was $320-330 per tonne cfr in July. The assessment is based on the latest HBI bookings from Russia, Venezuela’s only competitor in the HBI export market.

The import market for hot-briquetted iron (HBI) in Italy was flat during the week to Thursday July 5 on low demand, according to sources.

The freight rate for HBI from Venezuela to Italy is around $42-45 per tonne, sources estimate. Thus, on cfr basis price for HBI from Venezuela would be close to $337-345 per tonne.

HBI producer Comsigua was expected to be the next company to receive pellets from Sidor after Venpercar. However, the company, which idled production in 2018, is expected to be non-operational for a couple of more months due to technical and water supply problems, a source told Metal Bulletin.

Comsigua’s HBI capacity is close to 1.3 million tpy.

Briqven was next on the list to receive pellets from Sidor and resume operation, another source said, but operations remain idled due to the lack of raw materials and technical issues.

Briqven has capacity for 1.5 million tpy of HBI.

FMO’s 1 million-tpy HBI facility has been out of production in 2018, mainly due to lack of pellets.

“[HBI] exports have been very limited,” another source said. “The main exporters have been Orinoco Iron and Venprecar.

“Comsigua exported HBI produced last year,” he added.

HBI production in Venezuela will improve if CVG-FMO restarts operation at its 3.3 million-tpy pellet plant. However, currently the asset is down. The company has an expansion project for another 3.3 million-tpy pellet plant, which is under construction.

Currently, HBI producers can source raw materials only from one of Sidor’s two 4 million-tpy pellet plants, both of which are running at reduced capacity.

“With respect to the petro  – the Venezuelan cryptocurrency – nobody to my knowledge has executed a transaction thus far,” a source said.

In an attempt to mitigate the effects of a shortage of hard currency, Venezuela launched the petro in April and all export trade was supposed to be done using the crypto-currency.