Local Indian pig iron prices have remained at levels of around INR 18,700-18,800/mt ($311-313/mt) ex-works during the past week amid sluggish market conditions marked by a scarcity of buyers, traders said on Wednesday, July 16.
According to a Kolkata-based trader, buyers have adopted a cautious stance as hopes of price cuts by large producers receded and as a demand uptick particularly for foundry grade pig iron is not expected in the short term.
Large producers like Neelachal Ispat Nigam Limited (NINL) and Rashtriya Ispat Nigam Limited (RINL) deferred moves to adjust prices in reaction to falling demand, the trader said.
Producers are now unlikely to lower their prices since their cost of production will rise following the government decision to increase coal prices, he added.
The Indian government has increased import duty on coking coal to 2.5 percent up from zero and doubled the tax on coal to INR 100/mt ($2/mt) to fund clean energy technology.
Market sources said that NINL has spent about INR 9,000 million (approximately $150 million) per year on importing coking coal and now its costs are expected to increase by INR 250 million (approximately $4 million) a year.
Sources said that transaction volumes during the week have continued to remain depressed as most foundries are facing a cash crunch from low demand for castings and the inability to pass on higher input costs to buyers of foundry products.
Under the circumstances, most foundries are operating at very low capacity utilizations, maintaining minimal pig iron inventories, the sources added.