India: Pig iron sales fall by 7% at SAIL auctions in Nov’21

Pig iron sales at auctions conducted by steel major SAIL in Nov’21 declined by nearly 7% on the month to 36,300 t from 39,000 t in Oct. Bookings at SAIL pig iron auctions fell by 30% compared to over 50,000 t of sales achieved by the company in Sept, month-wise data compiled by SteelMint reveals.

The highest sales volumes of 14,500 t and 14,000 t were reported from SAIL’s Rourkela and Bhilai steel plants, respectively, with the Bokaro, Burnpur and Durgapur steel plants witnessing combined pig iron sales of 7,800 t in Nov.

As pig iron prices dropped rapidly on declining steel and coal prices and supplies returned to the market, not only did prices crash at SAIL auctions but participation, too, suffered.

For example, an auction from Bokaro Steel Ltd. (BSL) in the second week of Nov for 2,000 t of steel grade pig iron failed to attract buyers even after the auction was re-scheduled due to lack of participation. This was because of the unchanged base price, which stood at a much higher level than buyers were willing to bid for.

Likewise, another auction for 800 t of material from the company’s Durgapur Steel Plant (DSP) in West Bengal failed to garner any response. High floor prices deterred buyers from booking material at SAIL’s RSP auctions too.

Prices drop sharply

Leading pig iron producers across the country reduced prices in Nov, as per SteelMint reports. Downtrend in finished steel prices weighed on pig iron prices. In addition, coking coal import prices and met coke prices drifted lower in Nov, pressuring prices further.

• Leading producers such as Vedanta Resources reduced prices by INR 1,000/t ($14/t), while Tata Metaliks and Neo Metaliks cut prices by INR 1,800 ($24/t) and INR 500/t ($7/t), respectively, in Nov.
• As per SteelMint assessment, steel grade pig iron prices in Durgapur, eastern India have fallen by over 13% compared to a month back.
• According to SteelMint estimates weighted average pig iron prices fell by about 7%, m-o-m, at SAIL auctions from Bhilai, while prices dropped nearly 12% on the month at auctions from RSP.
• An auction for 6,000 t of basic grade pig iron from Bhilai Steel Plant (BSP) fetched bids at INR 39,500/t exw on 21 Nov. Bid prices decreased by INR 1,480/t compared to the previous auction on 9 Nov.

Notably, prices crashed to a five-month low at the SAIL-RSP auction on 25 Nov at which 9,500 t of basic grade pig iron was booked at a weighted average price of INR 36,720/t exw. Bid prices decreased by INR 2,930/t in comparison with the previous auction held on 20 Nov.

The overall downtrend in steel prices indicate that bids are likely to remain subdued at pig iron auctions in Dec.