Over the past week, prices in the local Indian pig iron market have increased by INR 1,000/mt to INR 27,650/mt ($396/mt) ex-works, amid base price hikes by private sector producers and a strong response by buyers to e-auctions by state-run producers, traders said on Wednesday, April 24.
Market sources said that private sector producers like Tata Metaliks increased base prices during the past week in response to reports of a significant decline in stock availability in several regional markets.
However, the sources said that large state-run producers maintained their base prices unchanged, but the fact that entire volumes offered at e-auctions conducted by producers like Steel Authority of India Limited (SAIL) were sold at prices significantly higher than reserve prices has provided support for local prices and is an indication of the fall in volumes available for commercial sale in the market.
“Market conditions both in terms of volumes and prices have improved during the past week. But I am not too sure whether the higher price levels and the tightening of supplies will besustained as no export shipments have been reported in the market over the past few weeks,” a Kolkata-based trader said.
“Also, several private sector producers, like Electrosteel Castings recently taken over by Vedanta, are reportedly planning to increase pig iron production on the back of strong billet prices. My anticipation is that billet prices too are unlikely to be sustained as demand for construction grade steel can only taper off with the monsoon season ahead and the usual slowdown in construction activities during the rainy weather,” the trader added.
At least two other traders said that a price correction of around INR 500/mt could be a possibility in the short term in the absence of export shipments and end-user resistance to the sharp rise in prices seen during the past week.
$1 = INR 69.87