Local Indian pig iron prices have declined during the past week, moving down by as much as INR 500/mt ($8/mt) in the eastern region, to around INR 15,900/mt ($252/mt) ex-works amid unexpected price cuts by producers, oversupply and failed export tenders.
"The previous stability in the local pig iron market proved to be short-lived. Too many bearish factors combined to put renewed pressures on prices and sentiment across steel and foundry grade pig iron took a beating," a Kolkata-based trader said.
"Prices suffered the biggest setback in the eastern region, while in the northern and central regions prices were down INR 200-300/mt ($3-5/mt) over the past week," he said.
"The market was taken by surprise by the sudden price cuts announced by large pig iron producers since the latter generally made decisions on prices early in the month and not towards the end of the month," the trader added.
Market sources said that Neelachal Ispat Nigam Limited (NINL) announced a price cut ranging at INR 200-400/mt ($3-6/mt) based on volume off-take, while Rashtriya Ispat Nigam Limited (RINL) lowered its offers by INR 200/mt ($3/mt).
Sentiments took a hit since the price cut by NINL followed close on the heels of the failure of the company's export tender to attract any viable offers, with the market anticipating a further worsening of the domestic oversupply situation, sources said.
The government trading house MMTC Limited's export tender for 40,000 mt of pig iron on behalf of NINL received bids at around $255/mt which was not found to be acceptable, forcing the trading company to decide to retender the volume later in the month.
Sources said that export offers are very close to local ex-works prices of $252/mt, reflecting bleak export opportunities.