Sales of pig iron at auctions conducted by SAIL in August 2022 fell around 50%, m-o-m, to 27,640 tonnes (t) from over 54,000 t in July, as per SteelMint data. Apart from April, auctioned volumes in August sunk to the lowest level this year as steel prices remained depressed and steelmakers faced margin loss in a bearish market.
Similar to April, there were zero allocations for auctions from SAIL’s Bhilai Steel Plant (BSP). The Bokaro and Rourkela plants sold over 12,000 t and 10,000 t, respectively, during the month, while the Durgapur Steel Plant (DSP) sold around 5,000 t.
The domestic merchant pig iron market has shrunk to under 5 million tonnes (mnt) per annum from over 9 mnt previously due mainly to the increase in usage of ferrous scrap. SAIL has emerged as the leading supplier since regular monthly auctions started in June 2020.
Price picture
Spot steel grade pig iron prices fell by INR 700-2,100/t in August, with the major drop of INR 2,000-2,100/t seen in the central and eastern regions due to decline in steel prices.
Merchant producer Tata Metaliks has reduced basic grade prices by INR 1,800/t and foundry grade prices by INR 1,500/t for September orders. The reduction in offers by other producers and fall in bids at SAIL auctions led to the price cut.
Buying interest has remained moderate, but might improve in the coming days if a pick-up in construction activity leads to positive trends in the billet market.
However, cost concerns continue to irk producers and if coking coal prices go higher in Q4CY’22 the pressure on producers will build amid still-low domestic demand.
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