Pig iron sales at auctions held by state-owned SAIL in June 2022 fell by around 4% on the month to 41,750 tonnes (t) from 43,450 t in May, as per month-wise data maintained with SteelMint. Buying interest remained mostly weak amidst bearish steel market sentiments post the implementation of 15% export duty on steel and pig iron towards the end of May, although it recovered somewhat towards the latter half of the month.
SteelMint estimates that SAIL managed to sell a little below 70% of the total quantity of 60,700 t of pig iron allotted at auctions in June from its plants across central and eastern India.
Sales from the Bhilai Steel Plant (BSP) increased to 10,500 t from just 2,000 t in May but Rourkela Steel Plant (RSP) saw sales dwindle to 13,250 t in June from 28,700 t in May. Bokaro Steel Limited (BSL) recorded sales of 12,000 t, while IISCO and Durgapur Steel Plant (DSP) posted combined sales of 6,000 t during the month.
Subdued demand, prices
In the first half of June, bids remained restrained at auctions against the backdrop of weak domestic demand. Also, high floor prices at auctions discouraged sales. For instance, an auction for 1,000 t on 6 June from IISCO Steel Plant failed to attract bids due to the high base price of INR 47,000/t exw.
In fact, domestic pig iron prices fell from around INR 45,500/t exw Durgapur on 1 June to INR 44,300/t on 15 June. However, by 30 June, prices had inched up slightly to INR 46,200/t exw. Even merchant producers reduced basic pig iron offers in mid-June on low demand and falling export realisations.
The extent of the downtrend in prices can be gauged from the fact that 10,500 t of basic pig iron from BSP was booked at a weighted average price of INR 43,100/t exw on 17 June, while similar grade material had been booked at the company’s previous auction on 5 May at INR 56,400/t exw.
Prices came under pressure due to declining values of steel raw materials. SteelMint data shows that BF grade metallurgical coke prices in eastern India dropped from INR 47,000/t ex-yard Odisha in the beginning of June to INR 41,000/t exy on 30 June.
Similarly, coking coal import prices slipped to $343/t CNF India on 30 June from $471/t on 1 June – a decrease of nearly 30%.
Outlook
Auctions from DSP and BSL in the last week of the month saw bid prices rising in the range of INR 1,000-1,100/t compared to auctions conducted in the first week of June, although high base prices are impacting sales adversely.
Nevertheless, with gradual recovery in steel demand and a marginal increase in steel, metallics and scrap prices, the market is undoubtedly witnessing a recovery in early July that should support overall pig iron sales at SAIL auctions.
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