Why Indian Pig Iron Prices May Fall?

Indian pig iron producers are reeling under pressure over bearish demand from both Indian domestic & global buyers.

Notably, due to dull sales domestic prices for steel grade material fell by INR 1,000-2,500/MT (USD 15-40), M-o-M.

Whereas analyzing few things there are indications for further slump in Indian pig iron prices due some of the factors below -

Low exports: For over a month there is no bulk export for pig iron owing to depreciated Rupee and volatility in global scrap prices. The gradual increase of supply in domestic market over already low demand is bound to affect the prices.

Last pig iron export tender was concluded in Mar'17 by RINL at the price of USD 300/MT FoB. However after that MMTC which is the largest exporter, has canceled its couple of export tenders due to low bid prices. In recent tender the company got bids of USD 280/MT & USD 300/MT.

According to vessel lineup data maintained by SteelMint, Indian Pig Iron export remain static in Apr'17(108,000 MT) which is down by 0.5% against 108,600 MT in Mar'17.

Steep Fall in Billet Prices: Indian domestic billet prices have gone down rigorously by INR 2,000-3,500/MT (USD 30-55) M-o-M. While, pig iron prices fell just to half. With sharp fall in billet prices, pressure on pig iron manufacturers increased slowly as induction owners have limited their purchases looking at high priced pig iron.

For instance, according to a smelters it will only be feasible for them when prices are lower approximately INR 2,000-2,500/MT whereas currently the pig iron is cheaper only by INR 500-1,000/MT in the Central & East India.

Bulk Scrap Imports: There are about 9-10 bulk scrap shipments booked by Indian smelters which will reach Indian ports in the coming month (Jun'17) onwards. The scrap is the key substitute for pig iron users and the high availability of scrap will directly affect pig iron sales, specially in South, West & North parts of India.

According to SteelMint sources, around 4.5-5.0 MnT scrap import may be report in Jun'17 which was almost nil since Feb'17 to till date (18 May'17).

Slumped coking coal prices: Global coking coal prices which rose to USD 240/MT due to the cyclone Debbie in Australia have now slipped to USD 168/MT FoB Australia. As the coal prices fall sharply there is a need to reduce pig iron prices by manufacturers as it will have an adverse impact on sales in anticipation that prices may fall further anytime soon.