Local Indian billet prices have staged a smart upturn during the past week, increasing by INR 1,900/mt to INR 29,800/mt ($419/mt) ex-works, amid rising fears of fall in supplies of pig iron and slight uptick in billet exports from large steel mills but near term outlook continued to be negative, traders said on Wednesday, August 14.
Market sources said that pig iron prices have increased by INR 500/mt during the past week at INR 24,000/mt ($338/mt) per ton ex-works, with secondary steel mills apprehending lower supplies and this prompted billet prices to spike.
According to market sources, on the supply side, one of the largest pig iron producers, Neelachal Ispat Nigam Limited (NINL) reportedly cut its production by a hefty 50% in face of acute liquidity crisis. At the same time, other large producers have been successful in concluding large pig iron export contracts led by two producers reportedly concluding deals to ship 50,000 mt to China for September delivery. State-run steel producer, Rashtriya Ispat Nigam Limited (RINL) too attempted to export 25,000 mt of pig iron through competitive bidding.
These developments in the pig iron market have triggered apprehensions of lower availability of pig iron for merchant sales for downstream conversion by steel mills, enabling billet prices to surge, the sources said.
Sources said that Steel Authority of India Limited (SAIL) successfully concluded an export tender for 18,900 mt of billet during the past week and although the company did not disclose price, market sources estimated the deal at around $400/mt FOB, which is equivalent to $435-440/mt CFR Southeast Asia. As SteelOrbis reported earlier, the previous deal price had been concluded at around $415/mt FOB.
“I would see the price spike during the last week as a temporary market aberration. Considering that high export volumes are not expected to sustain and supplies soon finding a balance, billet prices will soon settle down as demand and prices of value added rebars (thermo-mechanically treated) continue to seek lower levels,” a Kolkata based trader said.
$1 = INR 71.10