Over the past week, downward pressures have gained momentum in the local Indian pig iron market with prices decreasing by INR 500/mt to INR 29,500/mt ($436/mt) ex-works, as buyers were seen to be retreating from the market and with select producers continuing to offer discounts to check inventory build-up, traders said on Wednesday, June 13.
Market sources said that the auction of pig iron by Steel Authority of India Limited (SAIL) saw a very subdued response from buyers and bids have been concluded only after the producer significantly reduced the base price.
The sources said that buyers are unwilling to get into competitive bidding to secure their requirement of semi-finished product as they are able to get volume discounts on negotiated deals with other producers.
Some of the large producers reportedly have increased their volume discounts to the range of INR 200-300/mt ($3-4/mt) as most are operating at higher capacity utilization rates and discounting is imperative to check inventories from rising, the sources added.
According to a Kolkata-based trader, Rashtriya Ispat Nigam Limited (RINL) floated an export tender of 15,000 mt during the past week, but this is a small volume according to market expectations and has been interpreted as an indication of low interest from overseas buyers.
Although it could not be independently confirmed, the trader said that trading firm MMTC Limited on behalf of Neelachal Ispat Nigam Limited has concluded an export tender for 25,000 mt but only after agreeing to a cut in the bid price.
“With local pig iron prices moving down for the second consecutive week, buyers are retreating from the market and are unwilling to make fresh bookings, anticipating that the downtrend will gather pace as most large producers are increasing production and higher volumes are flowing into the domestic market,” the trader said.
$1 = INR 67.64