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Pig iron may move in narrow band, say traders

Amidst firmness in steel prices in the aftermath of the imposition of the minimum import price (MIP) in early February and indications of further hike in prices by leading producers in March, a section of traders in Raipur feels that pig iron prices might move in a narrow band at least till the next 4-5 months because of low demand levels.

“There is still not much demand for pig iron even as prices have inched up in the past one month and unless demand improves the market may not sustain any further rise in prices,” a Raipur-based trader told ISMW.

“I think pig iron prices will be range-bound and move both ways within a range of Rs

500 per ton at least till the next 4-5 months,” the trader said.

Asked about his take on price movement thereafter, ie, after 4-5 months, the trader said, “It will all depend on the overall position of the steel sector as a whole and government policies. There has been no major announcement to jack up steel demand in the Budget proposals for 2016-17 and the current firmness in prices is mainly on account of the MIP.”

“There is no major demand for foundry grade pig iron at present, at least in the Raipur market, though some demand is there for basic or steel grade pig iron,” the trader said.

Asked about his outlook on pig iron prices, the trader said, “It will all depend on how the steel industry as a whole performs. But one thing is sure that the worst is over for the industry and from here there can only be improvement.”

Coming back to the MIP, the trader felt that if steel prices continued to move up even in the coming months, the government may intervene and withdraw the scheme.

As announced by the government, there will be a review of impact of MIP in the first half of April (between April 1 and 15) and if it is found that prices have gone up abnormally, the government may even consider withdrawing it, he said.

According to the trader, the current basic price of pig iron (steel grade) is ruling at Rs 16,700 - Rs 18,500 per ton. For example, the basic price of NINL is Rs 16,900 per ton (steel grade) and Rs 17,300 (for foundry grade).

The basic price of steel grade pig iron of private producers in Rourkela is Rs 16,800 per ton, in Vizag the price is Rs 16,800, in Raipur (Nico) it is Rs 18,500 per ton and of Jindals’ Rs 18,000 per ton.

“The difference in price is largely on account of freight,” the trader said.