Pig iron manufacturers (secondary) across Indian market have raised offers sharply at one go and all of a sudden by around Rs 2,000/MT, which has taken place for the first time in Q2 FY 14 and after about three months time.
The main reasons attributable to the above are, as mentioned below.
Coke prices are standing at approximately US$ 250-260/MT CNF and were at the same levels about a month back.
The Rupee deprecation from 54 to 68 level against the US dollar has suddenly increased coke prices by Rs 3,640/MT, which translates to Rs 2,548/MT of hot metal considering a consumption of 700 kg per ton of coke for 1 ton of hot metal.
Pig Iron Plants were already Running in Big Losses
If Pig iron prices are not increased by a minimum of Rs 2,550/MT, many of the Pig iron plants which are already in losses will have no other option left, but to take a close down.
Tough Time for Pig Iron Makers since the beginning of 2013
Since January, Pig iron plants have been running in losses, manufacturers lowered production level and were struggling to liquidate the stock.
Availability of a cheaper substitute, Pooled iron, also hit Pig iron sales in the past three months.
In the last one month, offers had touched quite low levels, which was seen about 2 years and 8 months back.
Currently, offers are still standing below the cost of production.
Short supply of Pig Iron by Primary producers
The most important factor which pushed up prices in the last five days is shortfall of the material with state owned producers namely Neelachal Ispat Nigam Limited (NINL) and Vizag Steel Plant (VSP).
They are concentrating on export market presently and have closed export deals in large quantities recently.
Shipment of the material is yet to take place and current stock position for domestic sales is low.
Steel prices have moved up sharply in the current week due to shortage of material in domestic market.
A sharp hike in prices of Sponge iron, semi finished and finished products also accounted for Pig iron price rise.
NINL Surprised Streets by a Sharp Price Drop
In contrast to the ongoing market trend, NINL surprised streets with a big correction in its high grade Pig iron prices, availability of which is in very low quantities and sales closed for steel grade material.
With the rupee at current levels of 66-68 against the US dollar, the drop in prices of Pig iron by NINL indicates something fishy about the whole episode as per feedback received from the industry sources, especially since NINL has a good export potential and developed market for the same.
This has raised questions as to why has NINL taken this step, to which they remained unanswered.
Foundry grade Pig iron makers look to raise offers further
Foundry grade Pig iron manufacturers also raised offers by Rs 600 – Rs 1,500 (depending on the regions of supply) initially.
They are expected to increase offers further to cover the minimum deficit of Rs 2,500/MT in the coming days.
Prevailing Pig iron (steel grade) prices in Rs/MT:
Raipur: 25,000
Raigarh: 24,800
Jharsuguda: 23,000
Rourkela: 22,000
Cuttack: 23,000
Vizag: 22,500
Durgapur: 23,500-24,000
Giridih: 24,200
Bokaro: 22,800
Maharashtra: 26,500
Chennai: 25,000
Ludhiana: 28,500
Foundry grade:
Durgapur: 26,900 (Tata Metaliks), 25,800 (Others)
Goa: 27,500
Hyderabad: 27,000
Karnataka: 28,000-28250
Maharashtra: 29,000
Giridih: 25,500-26,500
Chennai: 27000
Ludhiana: 30,500
Basic prices
Ludhiana: VAT extra
For more details, contact
Seema Goenka
(seema@steelmint.com)
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