Pressures on the local Indian pig iron market have continued to gain momentum with prices decreasing by INR 500/mt ($7.5/mt) during the past week to around INR 16,700/mt ($251/mt) ex-works, due to the sharp fall in demand from the foundry sector and price cuts by producers, traders said on Wednesday, November 11.
According to a Kolkata-based trader, foundries’ problems have worsened over the past few months due to the falling demand from the commercial vehicle industry, which is shifting from the domestic market to imports for automotive casting components.
The trader said that most foundries have sharply reduced their off-take of foundrygrade pig iron after reducing their capacity utilization in response to the falling demand.
According to an official at the Institute of Indian Foundrymen, there are about 5,000 foundries in the small and medium-scale sector with a capacity of 10 million metric tons, but most of them are currently operating at 50 percent capacity utilization due to the lack of either replacement demand for castings in the domestic market and due to negligible export opportunities.
Market sources said that several of the largest producers are seen to be either reducing prices or increasing discounts to face falling domestic demand and the absence of any export markets.
Neelchal Ispat Nigam Limited (NINL) has decreased base prices for November by INR 500/mt ($7.5/mt), while Rashtriya Ispat Nigam Limited (RINL) has reintroduced volume discounts in the range of INR 500-1,000/mt ($7,5-15/mt).
Sources said that none of the pig iron producers including NINL and RINL have been successful in clinching any export orders in the last three months.