Commercial grade rails auctions conducted by state-run SAIL’s flagship Bhilai Steel Plant (BSP) have been garnering active response. The material on offer comprises both 52 kg and 60 kg rails, and prices at auctions are on the rise since April’21, as per SteelMint data.
An auction for 11,500 t (60 kg) commercial rails conducted by SAIL on 9 Jul’21 fetched a price of INR 41,100/t exw, while at the previous auction on 19 Jun, the company had offered 52 kg rails which were sold at a weighted average price of INR 42,750/t exw.
Volumes, prices rise at auctions
Volumes of IU-rails auctioned by SAIL stand at around 4,800 t in May and just about 3,600 t in Jun, while sales have already increased to over 11,500 t in Jul. Sales were around 6,400 t in Apr.
What is striking, however, is that shortage of 60 kg rails at Bhilai Steel Plant seems to have pushed up prices at SAIL auctions over the last couple of months. Prices have moved up from INR 38,250/t in April to INR 41,100/t in Jun. Prices are staying firm at INR 41,100/t levels in Jul too, SteelMint data shows.
SteelMint has reported that buyers had booked 4,800 t (60 kg rails) at a weighted average price of INR 38,250 /t and 1,600 t (52 kg rails) at INR 41,500/t exw in 21 Apr. Bids had increased by INR 4,000/t in 60 kg rails. In the previous auction on 18 Mar, out of a total of 9,300 t, buyers had booked only 300 t (60 kg rails) at a weighted average price of INR 34,250 /t exw.
Therefore, falling inventory of 60 kg prime commercial rails at SAIL-BSP are supporting prices at auctions, SteelMint notes.
Rail scrap
Interestingly, SAIL had been allocating increasing volumes of rail scrap at its secondary steel auctions. The buyers are the secondary mills from Raipur and nearby regions that use induction furnaces to produce semis and finished products. Importantly, the scrap is being bought only for melting purposes. Raipur, a hub of secondary mills, is located far from scrap generating centres, which are mainly the larger cities or regions close to auto hubs. Therefore, SAIL has many takers for large volumes of prime rail scrap offered at auctions.
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