What factors will drive India's pig iron exports in FY'23?

Amidst the ongoing global crisis, the concerns about pig iron supply in the international market have increased. As the major suppliers, Russia and Ukraine, are out of the market, India - with a surplus production of 4.5 mnt - is poised to cater to the major consumers like EU, US and Turkey in the coming fiscal year, SteelMint notes.

Russia is the largest exporter of pig iron while Ukraine is the third largest. Both the countries constitute around 54% of the global trade.

SteelMint latest price assessment of India's pig iron exports stood at $805/tonne (t) FOB east coast as on 17 mar'22. Prices have been on an uptrend since last two months.

The country has export potential of around 0.8 mnt of pig iron annually but due to unprecedented decline in domestic demand in H1FY'22 because of Covid, exports jumped by over 40%. Exports will further increase if the country starts producing in full capacity.

Factors that will India's pig iron exports:

• Increasing demand from USA: The global steel trade dipped by 4% in 2021, majorly because of stringent production curbs in China, the largest consumer and producer of the material.However, this year, with an expected rise in global steel capacity, pig iron demand is also expected to see a rise, especially from western countries like USA.

  As SteelMint reported earlier, Indian pig iron producers concluded some export deals for sizeable volumes to western countries, with highest share of exports bound for USA.

  Around 170,000 tonnes (t) of pig iron export tenders were floated by the major mills, with most of these heard concluded. These deals took place at around $800-810/t FOB levels.
  In addition, USA's electric-arc furnace (EAF) market share is expected to rise sharply by 80-85% by 2025 with an additional capacity of 14 mnt in the coming years, supporting pig iron demand.
  
  

• Reduction in supply: Exports declined sharply from major suppliers, Ukraine and Russia, which pushed up freight rates across the globe. However, despite this, pig iron demand across major consuming countries like EU, USA and Turkey, will remain supported amidst supply worries. It is more likely that USA, because of close proximity with Brazil, will have the largest share of the latter's production while other countries will look at India.
  
  

Indian pig iron market scenario
India has a total installed pig iron production capacity of 7 mnt annually. However, the actual production is around 4.5 mnt. Production decreases to 3.8 mnt when prices are low and goes up to 5.5 mnt when the market is bullish.

Domestic market: Usually demand remains high from the eastern part of the country as it is a big steel hub, accounting for over 50% of total demand while the rest from the other parts of the country.

Total demand comes around 3.8 mn t in FY'22. Total production from steel manufacturers and MSMEs this fiscal is at 4.5 mn t.

Exports market: Exports this fiscal year (till January) stood at 1.14 mnt, an increase of 32% compared to the previous year. This was largely because of dull domestic sales due to Covid and other reasons.

The major exports from India were shipped to China, USA, Taiwan, Oman, and Turkey.

Price outlook

Indian pig iron export prices are also expected to keep going up and there are very less chances of the trend going down in the near-term.