The weakening of Indian domestic pig iron prices have gained momentum during the past week, with a further drop of INR 1,000/mt ($18/mt) to a price range of INR 19,000-19,500 ($336-344/mt) ex-works, due to steady fall in demand for finished steel products, traders said on Monday, .
According to two Kolkata-based traders, buying volumes of user segments including foundries have fallen to negligible levels as most foundries are carrying large inventories of finished products and because fresh orders are not forthcoming.
Market sources have said that traders are offering aggressive discounts even at prices yielding negative margins to liquidate pig iron inventories with traders.
But despite steadily weakening demand, main producers have refused to offer discounts and most of the discounts being offered in the market are from trading margins, the sources said.
The sources said that the Indian government's move to introduce import duty on ferrous scrap in order to boost domestic consumption of pig iron had a very short-lived impact.
"The government's imposition of 2.5 percent import duty on scrap early last month, helped steady pig iron prices for just two weeks. Domestic pig iron demand fall has been so drastic that the marginal duty on scrap failed to sustain domestic pig iron prices," a trader said.