Sales of pig iron at auctions conducted by PSU steel major SAIL fell around 11% month-on-month to a little over 30,000 t in July’21 as against 34,050 t in June. However, sales declined sharply by 60% compared with 78,700 t in May, SteelMint data shows.
Pig iron sales at auctions plunged in June and July, as sales from March to May were 50-60% higher than July. The reason cited is limited allocations by SAIL due to low sales price realisations on pig iron as against semis & finished steel products.
Shrinking volumes at auctions
Auctioned volumes dropped from SAIL plants both in central and eastern India. Combined June-July sales from the Bhilai Steel Plant (BSP) in Chhattisgarh stood at around 17,000 t – half the auctioned volume of nearly 34,000 t from the flagship plant in May.
Although pig iron sales at Rourkela Steel Plant (RSP) auctions picked up in July as against June, sales at Bokaro Steel Plant (BSL) auctions witnessed a sharp m-o-m decline of 67% to just 4,850 t in July. Likewise, auctions by Durgapur Steel Plant (DSP) saw volumes shrinking to 1,800 t in July – a straight 70% decrease against 6,000 t in June.
Prices up on supply squeeze
As a result of the decline in allocations at SAIL auctions, merchant pig iron prices are on the rise. Strong demand due to firm steel prices continues to push pig iron prices higher amid limited allocations by SAIL. In addition, exports continue to remain attractive on strong global steel prices.
These factors have further contributed to the supply pressure in the domestic market. Merchant pig iron suppliers raised prices from mid- through to end-July, as per SteelMint reports. Recovering domestic demand and expanding export opportunities are also supporting foundry grade pig iron prices.
Bids edge up
Prices started moving north at SAIL auctions since the last quarter of July, as per SteelMint reports. At RSP’s auction on 28 July, 3,400 t of basic grade material was booked at INR 37,500/t exw, with bid prices increasing by INR 350/t compared with the previous auction on 16 July.
SteelMint reported that bids rose by INR 650/t at BSP’s auction for 6,000 t of pig iron on 22 July compared with the previous auction from the plant on 10 July. The 22 July auction was concluded at a weighted average price of INR 37,250/t exw. In fact, pig iron prices touched INR 39,000/t exw at the latest BSP auction in the first week of August. Similarly, prices at DSP and Burnpur auctions, too, rose steadily through the latter half of July, data reveals.
With the gradual recovery in semi-finished steel prices, pig iron prices are likely to remain supported. However, scant allocation at SAIL auctions seems to be propelling prices higher, SteelMint notes. SAIL, in fact, was the leading merchant supplier of pig iron in FY’21 with 0.63 mn t of sales. Therefore, prices are expected to inch up even higher in the coming days if allocated volumes at auctions continue to remain low.
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