The local Indian pig iron market has showed a widening divergence between steel and foundry grades with prices of steel grade losing ground, while prices of foundry grade pig iron have recorded gains, traders said on Wednesday, April 19.
Traders said that steel grade pig iron prices have moved down by INR 2,700/mt during the past week to INR 22,300/mt ($345/mt) ex-works, while prices of foundry grade pig iron have increased by INR 3,000/mt during the same period to INR 28,000/mt ($434/mt) ex-works.
"The wide difference in prices between steel and foundry grades of pig iron is a strange phenomenon in the local markets. The fundamentals of the market and costs of production do not warrant such a large price differential between the two grades," a Kolkata-based trader said.
"Even the assumption of strong demand and off-take by foundries does not fully explain the prices of both grades moving in opposite directions," the trader added.
Market sources pointed out that, while large pig iron producers had pushed up base prices citing the surge in imported coking coal prices, this still did not explain the divergent price trends at the dealers' end.
A section of market sources, however, suspect that, given the sharp rise in demand for raw material from the foundry industry, dealers may be artificially tightening supplies and jacking up prices to create an artificial bubble, though this could not be independently confirmed.
$1 = INR 64,56