Calcutta (India) - Exports of iron casting to the US, a major market for the foundry industry in Bengal, have suffered a setback because of an exorbitant increase in domestic pig iron prices over the past two years. Pig iron is the main input in iron casting.
With pig iron prices in the international market lower than prices in India, there is even a possibility of casting getting imported at very competitive rates. Prices of pig iron have peaked to around $650 per tonne in the domestic market compared with $500 per tonne in the US.
Cheap imports may have a serious long-term impact on the local foundry industry, the Indian Foundry Association (IFA) said.
Pawan Sureka, the chairman of the IFA, said prices of pig iron had increased to Rs 24,900 per tonne from Rs 12,500 two years ago. “In the last six weeks alone, prices have gone up more than 30 per cent. On January 31, pig iron prices were ruling between Rs 18,600 and Rs 20,300 per tonne, depending on quality. Against this, the current prices are between Rs 24,900 and Rs 27,500 per tonne.
Sureka said unless the government intervened to check the price rise of pig iron, most foundries would have to close down from next month.
The government, he said, should restrict exports of pig iron to check domestic prices.
He said foundries were not able to pass on higher raw material prices to consumers. This was because consumers were mainly government agencies.
Sureka said pig iron producers attributed the price rise to higher input costs of iron ore and coke. However, there was no parity between the rise in pig iron prices and the rise in input costs.
The IFA had told the government that pig iron producers should be asked to maintain their prices for at least three months to bring some stability in the market.