Capital blast furnace repair works undertaken by state owned semi-finished steel giant Neelachal Ispat Nigam Limited (NINL) have disrupted supply of the valuable steel making raw material significantly over the last month, throwing the delicately poised domestic market off balance.
NINL stands as the largest merchant producer of steel grade Pig Iron in India and dominates supply both domestically as well as in the export markets.
Capital repair works are to be carried out in blast furnaces once in 15 years and NINL decided to complete the due project this year.
According to plan company stopped offers from mid December and stopped production from November 26th . As per information the ready stock was being dispatched till mid December and since then the company has existed its stock and has stopped deliveries.
NINL sold about 15,000-20,000 MT pig iron in domestic market and about 6,000 MT for exports post plant maintenance. It is being believed that repair works would continue for a couple of months and production would likely commence by February.
Pig Iron prices begin to rise
The pig iron market in India has begun to react to the supply disruption. The major supply crunch is reported in Central & North region as these markets are totally dependent on NINL’s pig iron.
In other parts of the country, although effects of supply disruption are beginning to have an impact but it is not very significant as other producers have boosted production of pig iron and substitute metals.
It is the traders who have actively been raising their prices. Another contributing factor in the sudden surge in prices is rise in coking coal and billet prices globally. The two factors put together have send pig iron prices soaring beyond a three year high.
After, NINL plant maintenance, the private pig iron producers in Central & East India increase prices by Rs 3,000-3,500/MT and the price range reached at INR 26,500-28,500/MT from earlier at INR 23,500-25,500/MT.
Tata Steel and JSPL also hike their prices by about INR 2,000-2,500/MT for Ferroshots and pooled iron and the latest offers stood at INR 26,000-26,500/MT for Ferroshots & INR 25,000-25,500/MT for Polled iron ex-works, Odisha.
Exports to be hit
NINL also stands as the largest exporter of Pig Iron from India. It accounted for about 35 per cent of the country’s total export in 2017. Not only would the repair works at NINL affect its own export but would also alter overall export dynamics of pig iron.
Owing to a sudden spike in prices of Pig Iron within India, producers and traders are registering better realization domestically and therefore are looking to maximize local sales. Almost no major export offer has been completed in the last few weeks owing to this reason. Exports may be affected for the next two to three months.
Project to be game changer for semi finished steel industry
The capital blast furnace repair of NINL would prove to be a game changer for the semi finished steel industry in India as the blast furnace capacity utilization of the NINL Kalinga Nagar plant would go up from 55% to beyond 100%. Billet production would also be raised significantly.
While speaking to SteelMint Managing Director of NINL SS Mohanty informed that “the project which has been undertaken by NINL after 16 years is set be phenomenal achievement for the company as it would improve plant performance drastically. Production would be bolstered while coke rate would be lowered substantially. Subsequently the cost of production would be reduced to a great extent”.
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