Prices in the local Indian pig iron market have decreased by INR 500/mt ($7/mt) over the past week to INR 20,800/mt ($305/mt) ex-works, with producers starting to lower their base prices and the liquidity crisis in the market beginning to impact price levels, traders said on Wednesday, November 23.
“The market continues to remain paralyzed following the government ban on high value currency notes and the impact on prices has started to be felt. The upward trend of pig iron prices over the last few months has been reversed and even large producers have commenced lowering base prices in a losing battle to keep volumes moving,” a Kolkata-based trader said.
“Pig iron dealers across the country are mostly small or medium scale operators and their principal buyers are the foundries. Both these segments have no cash to meet incidental operational expenses and so they have sharply reduced their transaction activity in the market,” the trader added.
Market sources said that Neelachal Ispat Nigam Limited has been the first off the block to reduce its base price, cutting it by INR 1,000/mt ($14/mt), and others are expected to follow suit before the month ends.
The sources said that clearly the government’s demonetization decision earlier in the month has been impacting pig iron producers who are being forced to lower offers even in the face of the sharp rise in input costs like coking coal.
Although it has not been confirmed by others, one Kolkata-based trader said that dealers in central India around Raipur are believed to have started offering discounts of INR 500/mt ($7/mt) even after a similar reduction in actual offer price levels.
$1 = INR 68.46