Local Indian pig iron prices have sought lower levels during the past week, decreasing by INR 700/mt week on week to INR 27,300/mt ($391/mt) ex-works, with some producers adjusting base prices lower mid-month to liquidate inventories and compensate for negligible export opportunities, traders said on Wednesday, June 19.
Market sources said major producer Neelachal Ispat Nigam Limited (NINL) has lowered its base price by INR 500/mt, but it is not yet clear that other producers will also follow suit.
“The price adjustment by leading producer like NINL is surprising coming as it does in the middle of the month, and all the more so since NINL reported a 16 percent fall in pig iron production for May this year. This is a clear indication that there is a strong inventory buildup at producers and that stock movement has slowed down,” a Kolkata-based trader said.
“It is to be watched whether other producers too will follow up with similar price adjustments. Even traders are facing higher-than-normal inventories largely because of low off-take by the foundry sector in response to a fall in sales of castings and forgings as automobile manufacturers are lowering their off-take,” the trader added.
According to two other traders, there have not been any reports of export tenders being floated by any of the large producers for the last three weeks and the negligible lower shipments overseas have also contributed to inventory build-up across market segments.
$1 = INR 69.76