Indian pig iron prices close to all-time high on rising raw material costs

Domestic pig iron prices have hit a 3-month high. If prices rise by another INR 500/tonne (t), these will reach an all-time high since data maintained by SteelMint from Sept’10.

Latest prices of steel grade pig iron are assessed at INR 45,800-46,000/t exw-Durgapur as on 31 Jan’22. The similar price levels were last seen in end-Oct’21.

Factors behind pig iron price rally

• Rising met coke, coking coal prices: Indian pig iron producers have raised prices mainly on the back of a steady rise in coking coal and met coke prices.

Domestic metallurgical (met) coke offers rose by INR 8,000-10,000/t m-o-m in both eastern and western regions of India on 27 Jan’22, as per CoalMint’s latest assessment.

Meanwhile, Australian premium hard coking coal prices jumped by $94/t m-o-m to $445/t FOB as on 29 Jan’22 as against $351/t in the previous month.

• Rally in billet prices: Semi-finished (billets) prices across India saw a sharp rise following the cost push. To pass on the production costs to end-users, billets producers have sharply raised their prices over the past one month.

Billets prices in Durgapur were assessed at INR 48,400/t on DAP basis on 31 Jan’22, increasing by INR 4,000/t as compared to the previous month.

SteelMint’s benchmark daily steel billet index was assessed at INR 48,400/t exw-Raipur as on 31 Jan’22, climbing INR 4,650/t m-o-m.

• Export demand picks up: Major Indian pig iron producers have turned active in the exports market recently. A leading merchant pig iron manufacturer, Vedanta Ltd, floated an export tender for 20,000 t of steel grade pig iron. The details of outcome of the tender are awaited. As per sources, Indian pig iron exporters are aiming for $550-555/t FOB.

A week back, SteelMint reported a deal for Russian-origin pig iron concluded at $550/t CFR China.

India’s pig iron export volumes were recorded at 1.3 mnt in CY’21, as per customs data. Exports increased by around 50% y-o-y.

• Higher bids in SAIL’s recent pig iron auctions

SAIL’s recently held pig iron auctions fetched an overwhelming response as bids increased sharply.

The 3,000 t-basic grade auction from Bhilai Steel Plant saw bids rising by INR 5,280/t to INR 44,030/t exw compared to bids received in the previous auction held on 06 Jan.

In another auction conducted for 4,000 t of steel grade pig iron from Bokaro Steel Plant, the entire quantity was booked at a weighted average price of INR 44,650/t exw. Bid prices increased by INR 2,900/t compared to the previous auction on 19 Jan’22.