24-Sep-2013, 14:59:54
Neelachal Ispat Nigam Limited (NINL), India's largest Pig iron exporter since 2004-05, had offered 60,000 tonnes of steel grade Pig iron (with Si% up to 1.24) through an export tender on September 16.
Technical bids of the tender are to open today. Price bids will open at 1530 hrs IST on September 25.
Who are expected to participate in the tender?
SteelMint thinks that a couple of traders namely LG International (South Korea) and Prime Carbon GmbH (Switzerland) might be interested to participate in the tender.
Traders might bid for a single cargo only. From RINL, LG International is to receive 40,000 tonnes of Pig iron in October and Prime Carbon is to receive 30,000 tonnes each, in the month of October and November.
Another Korea based trader is looking forward to bag a 30,000 tonnes cargo from the Goa based Pig iron producer.
What can be a decent price bid for this tender?
NINL's domestic Pig iron offers are standing at INR 23,500/MT (ex works) for N1/steel grade with no discounts and Rupee is at 62.5 levels against USD.
With about 3 dollars of logistic cost and export benefit the company receives, price bid at USD 376-378/MT FoB is decent, as prices would be higher by about Rs 200-300/MT in comparison to domestic offers.
Will traders bid high for NINL's Pig iron cargo?
Southeast Brazilian Pig iron price is standing at 390/MT FoB and Ukrainian Pig iron offers are quoted at USD 380/MT FoB Black Sea. It has been heard that deals were recently closed at USD 372-75/MT FoB Black Sea.
Offers might continue to remain firm in the near future. Korean Pig iron buyers are uninterested to purchase the material from Brazil and Ukraine.
Freight charges from Paradip Port to Korea stands at 18-19 dollars. Traders might bid at USD 374-375/MT FoB as demand is slow and end users are holding a wait and see attitude regarding the movement in prevailing price trends to close any new deal.
Traders are looking to sell out the Indian Pig iron cargo to Far East based buyers, provided the deal is closed. They mostly sell out Indian Pig iron cargo to Korea based steel producers such as POSCO and Dongbu Steel.
What price is NINL expecting for its Pig iron export tender?
NINL is anticipating bids around USD 378-380/MT FoB and prices lower to USD 374/MT FoB might not be accepted by the Indian exporter.
The company's domestic Pig iron prices went up sharply in the first half of the month and its cost of production continues to remain high. Coke prices are standing at USD 269/MT CFR India.
The last Pig iron export deal was concluded by NINL at USD 375.38/MT FoB in the first week of August.
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