Market participants are expecting that Neelachal Ispat Nigam Ltd (NINL) is likely to cut Pig iron prices for July deliveries, looking at no major bookings at current offers.
NINL is the largest supplier of Pig iron in merchant market and a price setter for other manufacturers. The company has a Pig iron capacity of around 800,000 MT pa.
Factors that may force NINL to reduce prices
Poor response in SAIL’s Pig iron tender: Recent tender for 7,000 MT issued by Rourkela Steel Plant (RSP) at a base price of INR 16,700/MT on ex-plant basis has received lukewarm response. Sources mentioned that the company managed to sell only 200-300 MT of material. Prior to this, 3,000 MT Pig iron was sold at the same price of INR 16,700-16,800/MT. In last month, the company concluded few tenders at around INR 17,200-17,500/MT.
Smelters preferring low cost substitute products like Pooled iron & CPC: Smelters in domestic market are mostly preferring Pooled iron or CPC (Calcined Petroleum Coke) to limit their production cost. Pooled iron & CPC price is lower by around INR 3,000/MT, which have 3-4% less Fe content, manufacturers reported.
Increasing inventory levels: Trade sources reported rising inventory levels at SAIL, IISCO and NINL. At present, offers are too competitive by both primary & secondary Pig iron makers. For an instance, IISCO offers are assessed at around INR 17,000/MT ex-Burnpur, while, secondary manufacturers in the region are offering the material at INR 17,100-17,200/MT. Similarly, NINL prices are in the range of INR 17,500-17,900/MT, while, RSP (Rourkela Steel Plant) is offering at INR 16,700/MT ex-plant. To attract buyers, primary manufacturers have to reduce their offers.
Jindal Steel and Jayaswal Neco Industries continuously reducing prices: Jindal Steel in Raigarh and Jayaswal Neco Industries in Raipur are reduce prices around INR 1,500/MT against offers in last month. Both the plants are reducing offers due to poor buying interest by users amid declining billet prices. Current offers by Jindal Steel are assessed at INR 18,600-18,700/MT and by Jayaswal Neco at INR 18,800/MT. Jindal Steel’s official mentioned demand is not so far better even at reduced prices. Also, the plant is offering discount of around INR 200/MT on bulk purchase (above 1,000 MT).
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