Pig iron sales at auctions conducted by state-run steel producer Steel Authority of India Ltd (SAIL) decreased by over 56% to 34,050 t in Jun’21 compared with 78,700 t in May, data compiled by SteelMint reveals. Sales slumped because domestic demand for semi-finished steel continued to weaken throughout June, while a few auctions by SAIL failed to attract buyers – or received partial response – because the set base prices were higher than excepted.
Bids slump at auctions
For example, an auction for 5,700 t of steel grade pig iron from Bokaro Steel Plant on 16 Jun was unable to attract buyers, as per SteelMint reports. The auction closed without a single bid, though the base price had been set at INR 37,500/t exw, which was the last- concluded price at the previous auction from Bokaro on 9 Jun.
Reflecting overall market sentiments, bids at SAIL pig iron auctions fell sharply towards end-Jun. An auction for 3,000 t of basic grade material from the company’s Rourkela Steel Plant (RSP) on 25 Jun was concluded at INR 37,200/t exw, with bid prices decreasing by INR 450/t compared with the previous auction. This trend continues into Jul: another auction for 3,000 t of basic grade material from RSP on 1 Jul saw prices slipping by INR 1,200/t as against the previous auction.
Merchant producers reduce prices
Declining billet prices on overall dull demand for finished steel prompted merchant pig iron producers to cut prices. Private mills slashed steel grade pig iron prices by INR 1,000/t in the last week of Jun, with Tata Metaliks reducing prices by INR 1,200-1,400/t on 25 Jun. As per SteelMint assessment, offers by eastern India-based producers stood at around INR 37,500-38,000/t exw-Durgapur towards end-Jun.
This contrasts with the hike in prices by Durgapur producers in early-Jun following a sharp rise in bids at OMC’s iron ore auction, which was followed by merchant pig iron producers raising prices for the domestic market. As a result, SAIL auctions from Bhilai Steel Plant on 10 Jun, and from Durgapur Steel Plant earlier in the month, had witnessed moderate hike in bids. However, stiff steel prices and softening demand for steel due to seasonal factors led to a correction during the latter half of the month.
At the same time, some major mills are looking to rev up exports in a bid to tide over demand slowdown in the domestic market. At over 1 mn t, India’s pig iron exports had jumped a staggering 169% on year in FY’21.
Average prices decline
About 8,600 t of material was sold at the SAIL-BSP auction held on 10 Jun compared with over 33,000 t of overall sales from BSP in May. No other auction from BSP was held during the month. Similarly, just 3,000 t was sold at auctions from RSP in Jun as against 16,700 t in May.
As per SteelMint assessment, the weighted average pig iron price for sales from RSP dropped by INT 1,000/t in Jun compared with May, while BSP average auction prices declined by around INR 500/t m-o-m. SAIL has sold over 0.4 mn t of pig iron via auctions in the Jan-Jun’21 period, SteelMint data shows.
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