Indian pig iron prices have remained unchanged at INR 23,500/mt ($443/mt) ex-works, with producers anticipating a revival of the exports market but domestic buyers in the foundry sector are cautious about booking large volumes, several traders said on Thursday, October 11.
"Contrary to market expectations, major Indian pig iron producer Neelachal Ispat Nigam Limited (NINL) did not cut October prices and is planning to execute few export orders during the month," said a trader based in the eastern Indian province of Orissa where NINL's plant is located.
"Before the extended holidays in China last week there had been reports of supply issues related to pig iron being faced by Chinese mills. This holds upside potential in international export prices of pig iron and Indian producers have been banking on this for October shipments," the trader said.
However, the pig iron export market has become very uncertain for Indian producers and domestic prices are be expected to remain under pressure.
"The appreciation of the rupee against the dollar over the past few weeks has made exports very difficult and realizations from dollar earnings have fallen. We are weighing current export offers against domestic prices and dollar prices below a certain level will force us to focus on domestic markets," said an official at Rashtriya Ispat Nigam Limited (RINL), a major southern India-based pig iron producer.
According to a Kolkata trader, pig iron producers had rejected export offers of $375/mt last month as this level fell short of the expected $440/mt.
"Producers like RINL would have a cut-off export price of INR 23,000/mt ($433/mt) and anything below would force the company to stay away from the export market. However, there has been a lot of uncertainty about whether international prices will recover to such levels during the current month," the trader said.
If export offers continue at unattractive levels of $375-390/mt, an estimated additional 100,000 mt of pig iron will move into the domestic market where demand has remained subdued, traders said.
"If export shipments do not materialize for the major producers, the $9-15/mt price cut which was postponed in the first week of October could happen early next month", traders added.