Buoyancy in the local pig iron market in India has proved to be short-lived with prices softening by INR 1,000/mt ($15/mt) during the past week to INR 17,800/mt ($267/mt) ex-works, as buyers beat a hasty retreat anticipating the downturn will gain momentum amid a worsening of the oversupply situation, traders said on Wednesday, June 8.
“The rally in pig iron prices last month fizzled out amid fresh pressures from a flood of material coming into the market,” a Kolkata-based trader said.
“Buyers were seen to be retreating anticipating a further fall in prices as most producers have been pushing volumes into the market to prevent inventory buildups,” he added.
Market sources said that the slump in Indian pig iron exports has triggered apprehensions of significant export surpluses coming into the market, exerting fresh pressures on prices.
Sources citing a government report said pig iron exports from India had slumped 87 percent year on year during the January-May period this year to just 31,500 mt, adding that this will prompt most producers to keep pushing volumes into the domestic market.
At the same time, the sources pointed out that the market is confused over differing pricing strategies being adopted by large producers.
While Neelachal Ispat Nigam Limited (NINL) had reduced pig iron prices by INR 900/mt ($13/mt), another large dominant producer, Rashtriya Ispat Nigam Limited (RINL), had adopted an opposite stance, increasing its base price last week by INR 1,200/mt ($18/mt).
The conflicting signals from producers have resulted in a sharp fall in trading activity, the sources added.