Amid an absence of interest in purchases, Indian steel grade pig iron prices have inched down to lower levels of INR 24,500/mt ($444/mt) ex-works, compared to INR 25,000/mt ($452/mt) in the previous week, amid reports that large producers were offering discretionary discounts for larger volumes, traders said on Thursday, August 9.
"Not wanting to slash official prices after doing so late last month, large producers like Neelachal Ispat Nigam Limited and Rashtriya Ispat Nigam Limited (RINL) are offering volume discounts to create demand and liquidate inventories," a Mumbai-based trader said.
Market sentiments have been affected by reports of a very lukewarm response to RINL's export offer of 30,000 mt of steel grade pig iron for September shipment, the trader said.
The highest offer received by RINL to date against the export tender with a closing date of August 18, 2012, has been reported at around $400/mt FOB and, perceiving this to be indicative, domestic buyers refrained from making any commitments, he added.
"International pig iron prices have fallen below the $400/mt mark. The market is waiting for domestic producers to go in for another round of downward price revision to align the difference between high domestic prices and lower international prices," a Delhi trader said.
Inventories of construction steel are currently high owing to low demand amid monsoons, and at the same time small capacity electric arc furnaces have not had the wherewithal to import incurring the high cost of letters of credit (LC) loans from banks, a northern Indian furnace owner said.
The widening gap between domestic and international prices are yet another justification for the government to reduce import duty on pig iron to zero from five percent basic duty at present, to bail out the distressed foundry industry, he added.