Indian Pig iron prices which were rallying due to high raw material cost and rising billet prices have finally found some stability. The private pig iron producers reported slowdown in demand at current prices.
Presently, the offers for Steel grade pig iron are hovering at INR 26,200-26,400/MT ex-Durgapur, which was hovering at around INR 24,500-25,000/MT during Dec’17.
However as the inquiries are limited at current offers it seems that prices have less scope for further rise and are expected to gradually decline.
SteelMint has tried to find out the factors influencing prices. Below are observations which indicate that domestic pig iron prices may fall soon-
Volatile Steel prices: Indian Steel prices (Billets & Rebar) which increased by almost INR 4,000-5,000/MT (USD 62-78) during Nov-Dec 2017 are reported to be volatile in the current month.
Export demand falls: Indian pig iron export demand fell on higher offers and no deals have been reported in the month of Jan’18. The global buying interests are assessed at USD 370-380/MT while Indian producers are not willing to deal below USD 390-400/MT.
Falling Scrap prices: With the decline in global scrap prices, pig iron demand also weakened. In Jan’18, imported scrap offers to India fall by USD 15/MT and are reported for HMS 1&2 at USD 350/MT (containerize), CFR Nhava Sheva from Europe.
Higher prices of Pig iron than melting scrap amid high metalization: In conversion with billet producers SteelMint has found that domestic demand has also been negatively affected due to higher offers as compared to melting scrap.
The sources in northern region, Ludhiana reported, local HMS scrap is available at INR 28,000/MT while pig iron offers are hovering at INR 28,500-29,000/MT; both are excluding 18% GST. Similarly in Durgapur where scrap offers are at around INR 24,000-25,000/MT, pig iron is trading at INR 26,200-26,400/MT.
Declining Coal prices: Global coking coal prices which soar to USD 260-262/MT during Dec’17, presently have come down to USD 218-220/MT, FoB Australia. The prices fell in line with improved supply amid low demand by Chinese producers on expected slump in prices.
Recommencement of operations by NINL: Neelachal Ispat (NINL), India’s largest steel grade pig iron manufacturer which had stopped operations since Nov’17 due to blast furnace capital maintenance, is expected to resume productions most probably by Feb-end, according to sources.
The traders in Central, East and North India added, domestic supply for pig iron has already increased and when the Neelachal Ispat resumes their sales, domestic prices might further decline. NINL’s monthly pig iron production is recorded at close to 50,000 MT.
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