Steel major SAIL’s Bhilai Steel Plant (SAIL-BSP) has sold over 463,000 t of secondary steel -defective secondary steel or “re-rollable steel”, as per SAIL’s auction tender – in the Apr-Dec’20 period, data preserved by SteelMint reveals.
The material auctioned is mixed in nature comprising blooms, billets, plates, TMT bars, rails and also steel scrap. While other SAIL units such as Rourkela Steel Plant and Bokaro Steel Plant conduct secondary steel auctions, SteelMint understands that the quantity offered is far lower compared to SAIL-BSP.
Secondary steel sales make up about 3% of SAIL’s consolidated annual revenues. The steel-maker auctioned over 102,000 t of material in Dec’20, much higher than 74,038 t in Nov’20. Notably, sales spiked to 65,165 t in Oct’20 compared to just over 38,300 t in Sept’20 and below 29,000 t in the preceding month. Therefore, with rising interest for such material from different end-users, SAIL managed to auction considerably higher volumes in the last three months of CY20 compared to the earlier half of the year.
Prices move north
As assessed by SteelMint, bid prices for defective blooms at the auctions inched up above INR 30,000/t for the first time in Dec’20. The average Dec’20 bid price stood at INR 30,380/t significantly higher than INR 26,650 in Sept’20. Prices moved up to INR 29,000/t in Nov’20 from INR 24,100/t in Jul’20.
Prices at SAIL’s secondary steel auctions are on the rise primarily because prime steel prices have shot up incredibly fast in the last couple of months – as per one estimate, over 50% in the last six months.
SteelMint’s billet index for 100×100 mm induction grade material (ex-Raipur) has shot up by INR 9,000/t in the last three months to INR 39,300/t in Dec’20.
In addition, the disparity between prime steel prices and “defective” secondary steel must be an added incentive for scores of users – such as certain farm equipment producers – looking to maximise margins.
Moreover, re-rollable steel prices escalated at SAIL-BSP auctions amid relentless rise in prices of feed material such as melting scrap and sponge iron, SteelMint understands. Ferrous scrap (HMS 80:20 DAP Mandi) prices were assessed at INR 29,400/t in the last week of Dec’20. Similarly, sponge iron prices too were hovering above INR 26,000/t in end-Dec’20, SteelMint assessment shows.
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