Local Indian pig iron prices have surged sharply by INR 500-1,000/mt ($8-16/mt) to the range of INR 16,000-17,000/mt ($258-274/mt) ex-works on reports of producers hiking their base prices, but the market has reacted with a sharp fall in transaction volumes, traders said on Wednesday, April 8.
According to a Kolkata-based trader, Neelachal Ispat Nigam Limited (NINL) has increased its prices for April production by around INR 300/mt ($5/mt) and other large producers are expected to hike their base prices later in the week.
The trader said that the price increase was unexpected against the backdrop of sluggish demand and low volumes in the market, while buyers' reaction to the price revision was to pull back from concluding any fresh transactions.
The market price increase is an immediate reaction to producers adjusting prices upwards but higher levels are not expected to be sustained and distributors' prices will be corrected once transaction volumes continue to move down, he added.
Market sources said that major pig iron producers are buoyed by reports that MMTC Limited, a government-owned trading house and India's largest pig iron exporter, has forecast a revival in export transactions.
Higher export volumes will undoubtedly ease oversupply pressure on local prices, but optimism for a revival in export transactions might be premature, the sources said. They pointed out that the last successful export tender finalized by MMTC Limited was in January, at around $310/mt. Since then several tenders have either failed to evoke a response or offer prices were not acceptable to MMTC, the sources said.
However, the short-term export trend will be determined by the latest MMTC export tender which is offering 30,000 metric tons. Offers within the scope of the tender are expected later this week but are not expected to exceed $260-270/mt levels, the sources said.