Local Indian pig iron prices have declined by INR 200/mt week on week to INR 25,000/mt ($362/mt) ex-works, in anticipation of base price adjustments by large producers, amid the weak response to e-auction sales and given the lack of export opportunities, traders said on Wednesday, July 24.
Market sources said that e-auction sales conducted by Steel Authority of India Limited (SAIL) during the past week have received a weak response with unconfirmed reports suggesting that the producer was not able to push more than 50 percent of volumes on offer.
“Producers are attempting to push exports in response to weak domestic demand. However, this is not meeting much success as indicated by the fact no export tenders have been floated by any of the large producers in the current month,” a Kolkata-based trader said.
“One of the biggest contributors to the fall in volumes in the market is low bookings by the foundry sector. This is turn is a fallout of very weak demand for casting and forgings by the automobile manufacturing sector, which has been passing through a prolonged negative sales growth for the past several months,” the trader added.
At least two other traders said that billet prices have also weakened, softening by 5-10 percent over the past week, prompting pig iron producers to lower capacity utilization for captive conversion, leading to higher pig iron volumes available for commercial sales, and thereby putting additional pressures on prices and possibly leading to a lowering of base prices next month.
$1 = INR 69.00