Pig Iron Suppliers Anticipate Price Support On High Input Costs

Pig Iron suppliers in the Indian market, primarily based in the eastern region, foresee limited opportunities for a significant price downtrend despite recent Steel price decline among secondary (mid-sized) Steel mills in major locations. Rising input costs, particularly in Iron Ore and Coke, and an optimistic outlook on Steel demand in the coming weeks, are the driving forces behind this price support.

Resilient Prices In Durgapur

Durgapur’s producers have maintained their prices with only marginal adjustments, and they are not inclined to decrease rates. The impetus for this stance lies in a recent surge in Iron Ore and Coke prices, which is increasing their input costs. Additionally, these producers anticipate an improvement in Steel demand, especially with Secondary mills, in the near future. Such an uptick in Steel demand is expected to positively influence the Pig Iron market.

Stagnancy Amidst Falling Steel Prices

Despite a substantial decline in Billet prices by Rs 500-1,000/ton over a week, Pig Iron prices in Raipur and Durgapur have fluctuated only modestly, ranging from Rs 100-300/ton week-on-week. This suggests Pig Iron industry stability, even in the face of reduced Steel prices and sluggish demand among manufacturers.

Stable Foundry Grade Pig Iron

Foundry-grade Pig Iron prices, on the other hand, have remained remarkably stable. Major Indian Pig Iron producers are expected to announce price increases due to escalating raw material costs and a sufficient backlog of orders.

Current Prices

Steel Grade Pig Iron

• Durgapur: Rs 41,000-41,300/ton (Down by Rs 200/ton week-on-week), ex-works

• Raipur: Rs 40,300-40,500/ton (Down by Rs 100/ton week-on-week), delivered.

• Ludhiana: Rs 42,400-42,600/ton (Up by Rs 200/ton week-on-week), delivered.

Foundry Grade Pig Iron

• Durgapur: Rs 45,500-46,000/ton, ex-works.

• Ludhiana: Rs 46,500-46,700/ton (Stable on weekly comparison) delivered.

• Delhi: Rs 46,300-46,700/ton, 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

Numerous factors are at play, contributing to the strength of the Pig Iron market despite Steel price declines including:

• Surging Coal Prices: The coking Coal cost, a crucial raw material for Pig Iron and primary Steel mills, has skyrocketed to around $340-345/ton CFR India for premium Australian grades. This marks an increase of $60-70/ton month-on-month and an overall hike of about $90-100/ton since the first week of August.

• Iron Ore And Pellet Prices: Iron Ore and Pellet prices in India have surged by Rs 1,000-2,000/ton since the first week of August. This surge can be attributed to active participation in OMC’s recent auctions, despite high base prices, and robust demand with NMDC. Domestic Pellet prices rose by Rs 1,200-2,000/ton since August.

• Elevated Scrap And Sponge Iron Prices: Despite a recent slight decline in domestic Ferrous Scrap and Sponge Iron prices, they remain high as imported Scrap remained costlier. Market participants believe that Sponge Iron prices will continue to remain robust as long as demand supports them, given the persistently high input costs stemming from rising Coal, Iron Ore, and Pellet prices.

Market Outlook

With the backdrop of soaring input costs, particularly in Coal and Iron Ore, Pig Iron producers seem inclined to maintain higher prices in the short term, even in the face of subdued demand. Their decisions may be swayed more by the anticipation of a recovery in Steel demand rather than the risk of a sharp price decline.

OFB’s Insight

Pig Iron suppliers in Durgapur, India, keep prices stable amid increasing input costs, expecting a rebound in Steel demand. Unlike Steel, Pig Iron prices show minimal fluctuations. Foundry-grade Pig Iron rates remain steady, with producers planning upward adjustments due to sufficient orders and rising raw material expenses.