Pig iron is the purest form of iron ore without any impurities content in it and contains high carbon content such as coke. Pig iron is usually used in the manufacturing of ingot and billet. With the increase in demand for the long steel in the market, the demand for Pig iron increases adjacently. Demand growth will need increase in supply for which the Indian market will require more number of suppliers too. thus, with the introduction of new players, the market is now gaining more Pig iron manufacturers.
In an interview to Steel 360, Ashok Singh, General Manager, Marketing & Dispatch, Jayaswal Neco Industries Limited, Raipur (Chhattisgarh) said that Indian market will not witness an extreme shortfall situation in Pig iron in months ahead owing to upcoming new capacities. He added that weak basic grade prices have supported an increase in its volume in comparison to Foundry grade material.
Jayaswal Neco Industries Limited is a flagship company of Neco Group of Industries located in Central India. It has a 0.7 MnT pa Pig iron capacity and manufactures both basic and foundry grade of the material.
Q. Can you brief us on the Indian Pig iron market in terms of consumption and supply in Q4 FY 13?
In Q4 FY 13, consumption and supply of Pig iron was almost equal on the reason that RINL and NINL exported good quantity of Pig iron producers had cut down their production. Further, there was restriction of Pig iron supply by NINL into domestic market which helped marginal correction in both Basic and Foundry grade prices of secondary Pig iron producers.
Q. Price gap between Basic and Foundry grade Pig iron is reducing as falling prices of Basic grade material is putting pressure on the latter. What do you have to say around this with respect to the quarters ahead?
Indian market is different for both Basic and Foundry grade Pig iron. When Foundry grade material prices shoot up after a certain gap in comparison to Basic grade material by around Rs 1,500 to Rs 2,000/MT, Pig iron users prefer to buy Basic grade material and add Ferro to it for further consumption. Due to this, consumption of Foundry grade Pig iron reduces and demand and supply gap increases in Foundry grade material with correction in prices accordingly.
Generally, during monsoons, there is less demand for Pig iron and prices witness corrections. However, during the current monsoon, prices are expected to stand constant with narrow variations.
Q. Jayaswal Neco has been the only supplier of Pig iron in Chhattisgarh for quite some time now. Monnet Ispat has recently started offering Pig iron from Raigarh, do you see it as a major competitor?
It is an open market, Jayaswal Neco is not the only supplier in the state of Chhattisgarh as the major competitors like Mesco Steel, MSP Steel & Power, NINL, RINL and other plants are already supplying the raw material to this part of the country. Supply from Monnet Ispat is not likely to affect our sales considering Neco’s product quality and timely delivery.
Q. NINL is offering less quantity of Pig iron for domestic sales and Indian government has imposed 2.5% import duty on Scrap. How are the above factors going to help Jayaswal Neco?
NINL has already switched to steel making and will gradually curb Pig iron making. Billet production is expected to take place by July from their newly commissioned SMS. Domestic Pig iron market will not witness very low supply of the material as new producers such as Monnet Ispat, Visa Steel and other plants would supply the material in good quantities. The imposition of import duty on Steel Scrap will not impact Pig iron sales in a big way but will affect the Sponge iron market.
Q. Cast iron imports fell by almost 20% in FY 2013 indicating that demand from foundry sector is weak. How will this impact Foundry grade Pig iron producers?
Cast iron prices were already standing at lower levels and due to depreciation of rupee, import of Cast iron was not viable. Also, there was no great demand from the automobile industry. Imported cast iron is mostly used for making of steel and it does not hold relation with Foundry grade Pig iron production at large. Hence there will be no impact on Foundry grade Pig iron producers.