Indian domestic pig iron prices have come under renewed pressure as leading producers started liquidating export surpluses in the domestic market during the past week, forcing smaller producers to stop production, traders said on Thursday, November 22.
"Bookings above 15,000 metric tons are being offered at INR 22,000/mt ($398/mt) ex-works, while smaller quantities are available at INR 23,000/mt ($418/mt)," an Orissa-based trader said.
"According to market reports, bulk offers at lower prices are given by Rashtriya Ispat Nigam Limited (RINL) which has failed to get any offer above $400/mt against its export tenders in the last two months and so is diverting pig iron for domestic sales," the trader said.
According to market sources, at least two medium-sized pig iron producers in southern India have shut down production, while another in western India has postponed resumption of operations by another month, since current prices do not cover high prices of domestically sourced iron ore.
No export pig iron shipments have been executed in November and there have been no reports of any new export tenders from producers for shipments during December, indicating a lot of surplus in the domestic market, according to a Kolkata trader.
"Producers are in no position to cut the base price of pig iron given the supply shortages and high prices of iron ore. Volume discounts are aimed to liquidate inventories and may continue through December," said an official at an eastern India-located steel mill.
"Without any demand uptick in the short term, another cut of INR 500/mt ($10/mt) in pig iron prices by producers will be inevitable. But, at current iron ore prices, margins would move into the negative zone," the official said.