In the past week, local Indian pig iron prices have failed to show any recovery, instead weakening further by INR 500/mt ($9/mt) to around INR 20,500 ($372/mt) ex-works amid persistent sluggish demand and distributors' increasing inventories, traders said on Monday, May 20.
According to Kolkata-based traders, there has been no material change in low demand from foundries and at the same time traders are carrying large stocks, particularly those supplying to foundries in eastern and southern regions of the country, forcing them to lower offers for domestic sales.
"Pig iron trading has become a losing business as current prices do not offer any viable trading margin. Even demand is low for very small volumes which we traders find difficult to service but are forced to in order to remain in the market," a trader in Kolkata said.
"Main producers are also reported to be carrying large stocks. But they have the power of pricing and distribution in domestic and overseas markets. However, traders serving medium-scale foundries do not have the financial muscle to carry inventories and current margins do not cover interest costs either," the trader added.
Market sources discounted possibilities of a revival of the pig iron market in the medium term. They said that, while foundry grade demand is low, moderate demand for basic grade too will suffer in a month or so since the advent of monsoon rains will depress demand for construction grade steel products.