Local Indian pig iron prices have remained stable during the past week at around INR 18,500/mt ($307/mt) ex-works against a backdrop of modest improvements in foundry purchases and expected improvements in sentiment, traders said on Thursday, March 27.
According to a Kolkata-based trader, at the production end, the fall in prices of pellets has been welcomed by large pig iron producers as an opportunity to improve margins although there are no reports of any price reductions in the market.
On the demand side, large buyers in the foundry sector are expecting improvements in sentiment as the next government takes charge after the elections starting next month, the trader said.
The market expectation is that there will be a demand uptick as the next government will focus on giving a boost to the manufacturing sector which has been registering marginal growth over the past few months, he added.
Market sources said that, though there are still pressures of oversupply on local prices in the absence of any export tenders from producers, traders have been withdrawing their volume discounts anticipating that demand will pick up. However, a section of the market maintains that the upside potential of local pig iron prices will be limited to a maximum of INR 500/mt ($8/mt) since even the expected growth in manufacturing will likely occur in the medium term, sources said.
At the same time, India's central bank is unlikely to bring down interest rates next month in view of persistent inflationary pressures, and this too will limit the upside potential of local pig iron prices, the sources added.