Pig iron firms may roll back price rise partially

Domestic sponge iron sector in wait-and-watch mode, trying to gauge market appetite

Within two weeks of announcing a price rise, the domestic pig iron sector is considering a partial roll-back of the increase, owing to sluggish demand, officials say.

Effective June 1, domestic pig iron companies had raised prices of the commodity, following state-run NMDC’s decision to increase iron ore prices seven-nine per cent.

“First, there are no orders and second, whatever orders we are getting are at low prices. So, we are not ready to supply,” said a senior official of Hyderabad-based Sathavahana Ispat. “Prices of steel TMT bars, ingots and billets have dropped due to weak demand in the market and so, the pick-up for pig iron is also poor,” he added.

“We had raised pig iron prices by Rs 1,500 a tonne from June 1, but we will soon take a decision on roll back the increase partially, as the market is unable to absorb it,” he said.

Pig iron is the intermediate product obtained by smelting iron ore with coke. In an electric arc furnace, steel-grade pig iron is used in making construction steel, while in a foundry, it is used to make automobile parts and industrial moulds.

Tata Metaliks, Lanco Industries and Kirloskar Ferro are among the major pig iron players in India. Owing to weak demand in the domestic market, nearly all companies in this segment had inventories of 5,000-7,000 tonnes, dealers said.

Separately, the domestic sponge iron sector is in a wait-and-watch mode and is trying to gauge the market appetite before taking a decision on raising prices. “We want to raise sponge iron prices since steel companies have also raised prices, but the decision is yet to be taken,” said Rajib Mohanty, director of MGM Steel. “The quantum, too, hasn’t been decided. Let’s see what the bigger players will do and then, we will decide,” he added.

Earlier this month, primary steel producers had raised prices due to expected bullish demand from the infrastructure segment.

“As of now, there is no plan to roll back steel product prices. Perhaps, the companies will take a call by the end of the month. But so far, the market has taken the price rise quite well, and we do not see any issue with market appetite,” said a city-based dealer.