Prices in the local Indian pig iron market have continued to seek higher levels for the second consecutive week, increasing by 500/mt week on week to INR 29,900/mt ($455/mt) ex-works, as market expectations of an easing of tight supply have been fading and due to rising billet prices, traders said on Wednesday, April 18.
Traders said that pig iron prices increased by INR 1,900/mt over the past two weeks largely because the market’s hopes of an easing of tight supply have been fast receding.
The traders pointed out that Neelachal Ispat Nigam Limited, a major domestic pig iron producer, is expected to commence production at the end of this month after a maintenance shutdown of its blast furnace and so the tight supply situation was expected to ease.
However, at the same time, according to market reports, Vedanta Limited, with a plant in western India, has stopped supplies of steel grade pig iron in the wake of the closure of iron ore mines in Goa, and this will significantly negate the impact of Neelachal Ispat Nigam Limited's resumption of production, and hence the persistent tightness of supply has boosted pig iron prices, the traders added.
According to market sources, billet prices were up INR 500/mt during the past week, and this could prompt pig iron producers to set aside higher volumes for captive conversion and reduce commercial sales of pig iron.
“Tight supplies, the shortage of iron ore faced by producers in the western Indian states and higher billet prices will likely push pig iron prices to breach the INR 30,000/mt mark and reach a new six-year high in the short term,” a Kolkata-based trader said.
$1 = INR 65.65