Major Pig iron exporters are concentrating on expansion of their steelmaking capacity; Street holds a wait-and-watch stance to understand where India’s Pig iron exports industry is headed.
India is a net exporter of Basic grade Pig iron to South East and Far East Asian countries and competes with Brazil & CIS (Ukraine and Russia) countries in terms of quality and landed cost (freight being the advantage).
In FY14, there has been a drastic upswing in demand for Pig iron in the international market. Traders are actively participating & exporters are making profits (out of rising prices & favorable Indian currency) and selling big quantities at one go. Since mid-July, Indian currency weakened against USD (touched a life time low of 68.85 on 28 Aug’13); exporter’s en-cashed the opportunity.
NINL is India’s largest producer (0.85 MnT pa installed capacity) and exporter of saleable Pig iron since FY05. It has been a consistent producer of the commodity because of its low SMS capacity.
Problems with SMS, upsurge in Pig iron prices (domestic & international) and dull steel market, result in higher than usual Pig iron output at RINL. The company normally uses the hot metal in SMS.
If Pig iron exports from NINL and RINL slow down, one year down the line, companies such as Mesco Steel & others might get an opportunity to supply the material in big quantities to international buyers.
In Q2 FY14, Sesa Sterlite started exporting Pig iron in bulk quantities; had been exporting in containers since 2000. If at all there is a restricted Pig iron supply from state owned exporters, Sesa stands to benefit from an opportunity to supply in the international market. It may run its PIP (0.63 MnT pa installed capacity) at 100% capacity. Pig iron export from Goa in Apr-Nov ’13 is estimated at 0.17 MnT.