Goa based Pig Iron Maker finalizes an Export Deal for mid-Nov Shipment

One of the largest Indian Pig iron producers based in Goa with 0.625 MnT pa installed production capacity, has finalized an export deal for 20,000 tonnes of Steel grade Pig iron.

 The deal was finalized in the last week of October with the end user directly and at a price of 408/MT CFR Middle East. Shipment of the material will take place in mid-November from Goa Port.

In comparison to the last 30,000 tonnes Steel grade Pig iron export deal the company had closed in the beginning of October, prices are higher by USD 4.25/MT CFR.

This is the fourth export deal concluded by the Pig iron manufacturer in FY14. Owing to low demand for foundry grade Pig iron in domestic market, it has been concentrating on export market since the beginning of the current financial year.

Increase in supply of Steel grade Pig iron in domestic market and as prices are at a quite lower level in comparison to foundry grade material, demand for the latter is not so encouraging.

In domestic market, the Goa based Pig iron maker is offering foundry grade material at INR 27,500/MT (ex works Goa). Offers remain untouched in the past one month as demand has not improved in large. Steel grade material is mostly used for exports purpose.

Cost of Making Pig Iron Still High; 1.45 MnT Iron Ore Required in FY14

Cost of making Pig iron has gone up because the company’s mining operations in Goa and Karnataka continue to remain suspended. It is dependent on Karnataka e-auction Iron ore which is priced high.

Also, an increase of USD 7/MT M-o-M in Coke prices which is currently standing at USD 273/MT CFR India has raised input cost.

In Q2 FY14, the Goa based Pig iron manufacturer was the 4th biggest buyer of Iron ore from Karnataka e-auction and procured a total quantity of 264,000 MT i.e. 180,000 MT Iron ore lumps (Fe 60.9-66.25) and 84,000 MT Iron ore fines (Fe 59-66.43). It utilized 80% of the installed capacity and produced 0.13 MnT of Pig iron in Q2 FY14.

Average prices of Fe 63 fines stood at INR 3,769/MT and Fe 63 lumps were priced at INR 4,386/MT in Karnataka e-auction in Q2 FY14.

Prices including 10% Royalty and 12% FDT

About 80-90% lumps and 10-20% fines is used by the company in Blast furnace for Pig iron making; 1.6-1.7 MT of Iron ore is required for making 1 MT of Pig iron. It procures fines owing to a Sinter plant facility with an installed production capacity of 0.8 MnT pa.