Local Indian pig iron prices have slumped below the INR 20,000/mt ($310/mt) mark during the past week, declining by INR 900/mt week on week to the current level of INR 19,800/mt ($307/mt) ex-works amid the reduction in base prices made by producers and negligible buying from the foundry sector, traders said on Wednesday, June 28.
Market sources said that domestic producer Neelachal Ispat Nigam Limited (NINL) has reduced its pig iron base prices by INR 500/mt and other large producers are expected to follow suit over the next few days.
Traders said that a reduction in base prices is expected in July and the early announcements by producers are taken as an indication that they are saddled with excess inventories.
It is also possible that the producers are pushing for inventory reduction ahead of the introduction of the reformed indirect tax regime - the Goods and Services Tax - in July and that they want to avoid carrying old stocks attracting the old rate of taxes, the traders said.
However, the traders added that, with the foundry sector virtually bringing all fresh pig iron bookings to a near halt, the reductions in base prices by producers and lower dealer prices are not expected to improve transaction volumes in the market.
$1 = INR 64.55