Indian domestic pig iron prices have continued to remain soft in the past week and are currently at INR 23,000/mt ($416/mt) ex-works, with discounts ranging between $5-8/mt in select Indian markets, in addition to volume discounts of $15-18/mt for bookings above 30,000 mt, traders said on Thursday, November 29.
"The basic pig iron market trend has remained as weak as in the previous week, with base price at lower levels. Marginal additional discounts are offered to buyers in southern and northern India," an Orissa-based trader said.
"Most producers are carrying large inventories and buyers have an upper hand in negotiating higher volume discounts," the trader said.
According to market sources, Neelachal Ispat Nigam Limited (NINL), a major pig iron producer which had exited the export market three months ago, has floated a 30,000 mt export tender for January shipment.
The fact that NINL has re-entered the export market even though another large producer, Rashtriya Ispat Nigam Limited (RINL), had failed to find an overseas buyer for a similar quantity in the last three months, is an indicator of excess pig iron available in the market, the sources said.
"Several pig iron producers are facing severe constraints in sourcing iron ore raw material. One medium capacity producer in Karnataka in southern India and another similar unit in Goa in western India have temporarily suspended production owing to scarcity of iron ore," a Kolkata trader said.
"Sesa Goa has already announced that it will have to suspend operations of its 250,000 mt capacity pig iron plant if it is unable to import iron ore at competitive prices," he added.
With an estimated 75,000 mt of exportable inventories at large producers, production stoppages can readjust the current demand-supply imbalances though over a period of three to four months, traders said.
While total pig iron production is forecast to fall during the December-March period amid iron ore shortages, the potential price uptrend will be limited to a few dollars per metric ton since most foundries are running at very low capacities, the traders added.