India: Sales volumes rise at SAIL pig iron auctions in Sep’21 as prices edge higher

Pig iron sales at auctions conducted by PSU steelmaker SAIL in Sep’21 increased by 16% on the month to more than 52,000 t in comparison with 44,940 t in Aug, as per data maintained with SteelMint. Sales volumes at SAIL auctions have risen, although slowly, vis-à-vis 30,000 t in Jul and around 34,000 t in Jun.

Auctions from SAIL plants

On a year-on-year base, however, pig iron sales at auctions have shot up significantly compared to just around 23,000 t in Sep’20.

While sales from SAIL’s flagship Bhilai Steel Plant (BSP) increased to 24,000 t in Sep’21 as against 18,000 t in Aug.

Likewise, pig iron sales at auctions held by Bokaro Steel Plant (BSL) in Jharkhand rose markedly to over 18,000 t as against 6,000 t in Jun.

Pig iron rally

The recent rally in domestic pig iron prices has naturally been reflected at SAIL auctions prices. As per SteelMint data, domestic (steel grade) pig iron prices have reached an all-time high of INR 46,000/t exw-Durgapur.

Reasons are not far to seek. The almost uninterrupted hike in coking coal import prices and domestic met coke prices have pushed pig iron to record highs.

Initially, high raw materials costs triggered the rally in pig iron, which played a part in raising prices at SAIL auctions. With finished steel prices on an uptrend supporting prices of semis and increased export demand, it could be expected that SAIL would see increased volumes being put under the hammer in the months to come.

Prices edge higher

SteelMint calculated the weighted average price for pig iron sales from SAIL-BSP at around INR 39,000/t for Sep, while the monthly average prices from BSL stood at INR 40,150/t in Sep compared to INR 38,200/t in Aug.

At BSP’s auction for 8,000 t of basic grade pig iron on 22 Sep, the entire quantity was booked at a weighted average price of INR 40,150/t exw. Bid prices increased by INR 2,000/t compared to the previous auction on 14 Sep.

Around 2,000 t of material was sold from RSP on 21 Sep at a weighted average price of INR 40,850/t exw. SteelMint reported that bid prices had increased by INR 3,350/t compared to the last auction held on 8 Sep.

Outlook

SteelMint data shows that SAIL auctioned off around 0.52 mn t of pig iron in the Jan-Sep’21 period. From Jun’20 onwards, SAIL had sold 0.63 mn t of pig iron in FY’21. Total pig iron sales at SAIL auctions are expected to be in the range of 1-1.5 mn t in FY’22.