Pig Iron Market To Remain Volatile Despite Recent Declines
20 days ago
Mild Steel
Mild Steel

Pig Iron Market To Remain Volatile Despite Recent Declines

The Indian Pig Iron market remains volatile due to sluggish demand and uncertain trends. Rising Scrap, Sponge Iron, and Raw Material prices influence resilience, with a potential 1-3% market shift anticipated. Stay vigilant.

The Indian Pig Iron market is expected to remain volatile as indicated by market participants. Steel prices saw an initial surge in September 2023, but the Pig Iron market experienced a downtrend (declined by Rs 500-1,000/ton week on week). This decline can be attributed to sluggish demand and uncertain market trends.

Let’s explore the factors affecting the Indian Pig Iron market and its prospects.

Current Demand Scenario

Pig Iron producers in both the eastern and western regions of India have reported a slight slowdown in demand, primarily due to slightly dull Steel sales with secondary (mid-sized) Steel mills. However, industry experts believe that inquiries will bounce back in the coming weeks, possibly after the celebration of Vishwakarma Puja on 17-18 September.

After the festivities, smelters are expected to resume purchases to secure raw materials for their ongoing operations. Robust Steel demand anticipation also plays a significant role in this scenario, as India is gearing up for the Lok Sabha elections in the first half of 2024. The government is keen on completing major ongoing projects at a rapid pace and announcing new infrastructure initiatives to showcase the country’s growth potential.

Current Prices

Let’s have a look at the current prices across various grades:

1. Steel Grade

  • Durgapur: Rs 40,500-41,000/ton (Down by Rs 600/ton week-on-week), ex-works.
  • Raipur: Rs 40,300-40,500/ton (Down by Rs 500/ton week-on-week), delivered.
  • Ludhiana: Rs 42,500-42,700/ton (Declined by Rs 500/ton week-on-week), delivered.

2. Foundry Grade

  • Durgapur: Rs 45,500-46,000/ton, ex-works.
  • Ludhiana: Rs 46,500-47,000/ton (stable on weekly comparison), delivered.
  • Delhi: Rs 46,500-46,800/ton (Down by Rs 1,000/ton week-on-week) , delivered.
  • Ahmedabad: Rs 46,500-47,000/ton (Stable on weekly comparison), delivered.
  • Kolhapur: Rs 47,000-47,300/ton (Stable on weekly comparison), delivered.

Influencing Factors

Several factors are contributing to the resilience of the Indian Pig Iron market despite recent challenges:

  • Strengthening Imported Scrap Prices: Domestic Ferrous Scrap prices remain strong due to a balanced supply-demand equation and higher import costs, which have surged by approximately $20-30/ton against offers in July.
  • Higher Sponge Iron Prices: Despite temporary corrections during the festive season, Sponge Iron prices have risen by nearly Rs 2,000-3,000/ton month-on-month. This increase is closely tied to the Steel demand and soaring prices of Iron Ore, Pellets, and Coal, suggesting support in the overall Steel market, including Pig Iron.
  • Iron Ore: Iron ore prices in India have seen an upswing of Rs 1,000- 1,500/ton month-on-month. Industry experts suggest that major mining giants such as NMDC and OMC are likely to keep prices strong in the coming weeks.
  • Coking Coal Costs: Coking coal, a vital raw material for Pig Iron producers and primary Steel mills, has seen prices rise to approximately $325-330/ton CFR India for premium Australian grades. This marks an increase of around $50/ton month on month.
  • Sufficient Supply: Since almost all Pig Iron plants are operational in India, the Pig Iron supply is sufficient in the domestic market. Additionally, imports continue, indicating that there won’t be a significant price hike due to ample availability in the spot market.

Market Outlook

Considering these factors, the domestic Pig Iron industry is expected to witness changes in the range of 1-3% in the coming days. A lot depends on the stability of Steel demand and Coke price movements. Also, if there is the resumption of Pig Iron exports, along with other Steel products, could inject momentum into the market.

As we move forward, it’s crucial to keep a close watch on developments in the Steel sector, especially as the rainy season concludes. The construction sector is expected to pick up pace, which could provide a much-needed boost to the Indian Steel market.

OFB’s Insight

In a volatile Indian Pig Iron market, the interplay of factors like Steel demand, raw material costs, and government projects shapes its future. Despite recent challenges, the market appears resilient. As political events and construction activities progress, staying watchful remains essential for industry stakeholders in this dynamic scenario.

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