Pig iron makers in the country have cut prices owing to sluggish market demand for the intermediate steel good, defying earlier trade expectations of price stagnation in the July-August period.
“We had to cut prices by around Rs 400 per tonne to Rs 25,000 a tonne for steel grade pig iron as there is no buying interest in the market,” said J P Mohapatra, marketing manager, Neelachal Ispat Nigam Ltd (NINL).
India produces around 5.5 million tonnes of pig iron every year. NINL, jointly promoted by MMTC Ltd and the Odisha government, is the biggest producer and exporter of pig iron in India.
Other pig iron makers have followed suit after the price cut by the industry leader. Mesco Steel, a pig iron maker in Kalinganagar area, has also slashed rates.
“We had to cut rates after the announcement by our neighbouring plant NINL, as we want our product to be competitive. But we did not slash the price by a similar amount, as we were already offering steel grade pig iron Rs 200 per tonne lower than other players,” said Reeta Singh, managing director of Mesco Steel, a pig iron producer.
While producers said the price cut was in line with the recent drop in prices of iron ore, traders said it was poor industrial demand that compelled them to reduce the rates.
“There is no demand for pig iron these days, as most buyers have cut down their procurement orders to close to nil. Poor demand for finished steel products, coupled with off-peak monsoon season, is affecting the demand for pig iron,” said Ajay Agrawal, a Raipur-based pig iron trader.
Pig iron is the solid form of hot iron metal, obtained by smelting iron ore with coke. It finds its usage in domestic as well as international markets, in electric arc furnaces and in foundries. Electric arc furnaces use steel-grade pig iron in making construction steel, while foundry, grade pig iron is used to make automobile parts and industrial moulds.
Producers have also reduced the rates of foundry-grade pig iron by around Rs 400 per tonne to Rs 27,000 per tonne on poor demand from industries and automobile makers. Foundry-grade pig iron commands a higher price than steel-grade, due to higher coke consumption.
“We used to sell about 300 tonnes of foundry-grade pig iron every month at the start of this year. But these days there is no demand for this material. Most foundries have also stopped operations because of the monsoon season,” said Anand Sarkar of Ghaziabad-based Sushant Steel Traders.