- Prices of other metallics drop, scrap imports increase
- Sluggish finished long steel demand keeps Indian pig iron prices under pressure
- Prices may rebound as export demand gains momentum
Morning Brief: Domestic pig iron prices dipped by around INR 1,000/tonne or 2% m-o-m in February 2023, reveals data maintained with SteelMint. Average monthly prices of steel grade pig iron in February ruled at INR 43,680/t compared to INR 44,500/t in January.
Reasons for the drop in prices
Dip in prices of substitutes: All the competing metallics also showed a m-o-m fall. For instance, domestic scrap fell by 3% and pellet-based sponge iron by 2%. These drops occurred mainly due to moderate demand for finished steel in the secondary sector. Sponge especially fell because of the dip in billets prices.
Liquidity issues in the local markets also kept prices sluggish and range-bound for metallics.
“On the one hand, raw material prices are high, on the other, sponge and billet prices are coming down. There is no clarity and traders are wary,” said a source.
That apart, imports of ferrous scrap has been seeing a steady increase since the past eight months or so. In January 2023 these touched 1.53 mnt against 1.35 mnt and 1.47 mnt in November and December, 2022 respectively. This ensured enough availability of competing raw materials which in turn dampened pig iron prices.
Pressure from pig iron imports: End-February vessel-tracking data reveals that imports of pig iron increased since October 2022 because of price viability. These cargoes were possibly booked in September-October, when domestic average pig iron prices were ruling at a higher INR 44,000/t. A volume of around 25,000 tonnes were booked from Russia for end-February unloading at Paradip Port on the east coast of India.
Some traders also explored Russian pig iron at $470/t CFR India levels which work out cheaper at around INR 38,500/t against the average domestic price.
Increase in domestic supplies of pig iron: Neelachal Ispat Nigam Limited (NINL) has begun operations post-its acquisition by the Tata’s and its capacity is being ramped up to a rated nearly 1 mntpa.
That apart, crude steel production from the primary mills is stable and cruising at around 10 mnt, which is also keeping supplies of an intermediary product like pig iron propped up.
Outlook
March is likely to see a rebound in prices since export offers may look up amid the recovery in global steel tags. Quake-hit Turkiye has been buying pig iron in large volumes and India has already exported some. SteelMint heard of export bookings of over 60,000 t of pig iron. Around 40,000 t were contracted to Turkiye for March-April 2023 shipment at a tentative price idea of $525/t CFR. Another major seller concluded two export shipments of possibly 20,000 t last week at around $485-495/t FOB, perhaps to Southeast Asia, although the destination could not be confirmed. Further pig iron enquiries were heard to be under way.
Moreover, with the financial year drawing to a close, steel prices may remain firm and further offer support to pig iron.
Sales of pig iron at auctions conducted by PSU steelmaker Steel Authority of India (SAIL) in February stood at 8,750 t. Sales from SAIL saw a record y-o-y 79% drop in January to 7,000 t — a trend that may also keep prices firm. In fact, SAIL pig iron auctions saw sales falling by almost 60% to a mere 7,500 t in January 2023 from over 17,000 t in December, 2022.
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