India: TATA Metaliks Reduces Pig Iron Price by INR 700/MT

TATA Metaliks Limited (TML) has cut its Foundry grade pig iron price by INR 700 /MT (USD 10) for Mar'20 deliveries. The company is one of the largest foundry grade pig iron manufacturers in India and supplies its material mostly to North-east regions including local market.

-- The current offers by TML are reported at INR 31,300 (USD 425)/MT for Foundry grade pig iron ex-plant, Kharagpur, eastern India.

Prior to this, TML had kept its prices firm for basic grade pig iron in Feb'20 after a sharp rise of total INR 3,000/MT (USD 41) in Jan'20.

The company's current price reduction is attributed to low pig iron offers by private and government owned mills as well. As per our assessment, pig iron prices in India have come down by INR 1,000-1,400/MT in Feb'20.

Tata Metaliks - a subsidiary of domestic steel giant Tata Steel has a manufacturing plant at Kharagpur, West Bengal, where pig iron and ductile iron pipes are produced.

TML Q3, FY20 Results

-- TML achieved growth in PAT of 96% in Q3 FY20 over Q2 FY'20.

-- The company demonstrated robust performance in Pig Iron division with deliveries higher by 12% compared to Q2 FY'20 and 40% compared to Q3 FY'19. It was possible because of the improved performance of blast furnace, raw materials optimisation and higher coal injection along with oxygen enrichment.

-- Although Ductile Iron (DI) Pipe deliveries decreased by 4% and 18% compared to Q2 FY'20 and Q3 FY'19 respectively, good operational performance on cost front helped DI Pipe division to achieve an operating margin of 20% (as compared to 13% in Q3 FY'19).

-- The quarter saw a continual slide in prices of major raw materials like coal, coke and iron ore which dropped by around 10-15% compared to Q2 FY'20 which also impacted the price realisation of both Pig Iron and DI pipe to drop by around 3% compared to Q2 FY'20.

Outlook

As per company reports, outlook for Q4 FY'20 for the DI Pipe business is cautiously optimistic as Q4 is usually the best quarter for DI Pipe business but there are some concerns of fund flow to projects.

With recent firming up of iron and steel prices, outlook for Pig Iron market is optimistic and with the expected stable blast furnace operations, overall profitability for Pig Iron business in Q4 FY'20 is expected to improve further.