Limited Orders And Decline In Steel Prices Weigh On Indian Pig Iron Industry

The Pig Iron industry in India is facing challenges due to limited orders and Steel prices declining. Suppliers based in eastern India have reported a decrease in orders, leading them to further reduce their prices by Rs 500/ton today in Durgapur. This decline in demand can be attributed to the continuous drop in Steel prices, which has resulted in a downtrend in Pig Iron prices from the high levels witnessed in the previous week.

Additionally, the resumed downtrend in Coking Coal prices impacted Pig Iron demand, as major buyers are holding off on bulk procurements in anticipation of further price drops, trade participants have reported to Ofbusiness.

Key Factors Behind Downtrend

• Plummet Billet Prices- In a week, the MS Billet Pig Iron prices experienced a significant drop of around Rs 1,000/ton. This drop is similar to the price corrections seen in Pig Iron, which also decreased by Rs 700-1,200/ton during the same time.

• Declining Coal Prices- The imported Coking Coal price, which was volatile during the first half of May 2023, has started declining once again. In a week, it dropped by around $10/ton, and compared to the beginning of April 2023, it fell by $70-80/ton. For Australian premium Coal, the current price stands at approximately $235-240/ton CFR India. The downturn in Coal prices had an impact on Pig Iron demand as well.

• Narrowed Price Gap- In the eastern region, the price gap between Ingot, Billet, and Pig Iron has shrunk to around Rs 500-1,000/ton. This narrowing price gap has weakened the demand for Pig Iron, as ingot and Billet producers are exploring other substitutes such as CI Scrap. As a result, there is low procurement of Pig Iron at the prevailing offers.

• Exports- The export market for Pig Iron remains sluggish, with limited inquiries and low-price realizations. Consequently, the export material is being dumped in the domestic market, creating supply pressure from major suppliers.

Current Prices

• Steel Grade- The latest offers from Durgapur-based mills for Steel-grade Pig Iron are reported to be around Rs 42,000-42,200/ton ex-works in east India. This reflects a decrease of Rs 1,000-1,200/ton compared to the previous week’s offers. In the central Indian market of Raipur, the prices stand at around Rs 42,000/ton, which is a decline of Rs 700/ton from the previous week.

• Foundry Grade- The Foundry-grade Pig Iron prices have remained volatile, with changes of Rs 200-400/ton on a week-on-week basis. However, in Gujarat, there has been a decline of Rs 500/ton compared to the previous week. The current offers range from:
  • Rs 45,000-45,500/ton- in Ludhiana
  • Rs 45,500-46,000/ton in Delhi
  • Rs 47,000-47,500/ton in Ahmedabad
  • Note- The prices are on a delivered basis.

Is This The Bottom Line For Prices?

Suppliers in eastern India believe that Pig Iron prices are likely to remain under pressure due to sluggish global trends. The industry expects limited scope for recovery, considering the improving domestic supply, sluggish global trends, and the negative price directions of primary mills’ Finished Steel products. The ongoing challenges in the industry, such as limited orders and declining Steel prices, indicate a challenging period ahead for the Indian Pig Iron sector.

OFB’s Insight

The Indian Pig Iron industry is struggling due to limited orders and declining Steel prices. Factors such as price movements, falling Coal prices, narrowed price gaps, and sluggish export markets contribute to the downward trend. The industry anticipates continued pressure on Pig Iron prices, making recovery difficult in the near future.

Read more: Domestic Structural Steel Market Facing Challenges Amidst Weak Demand

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