Pig iron sales at auctions held by Steel Authority of India Ltd. (SAIL) fell by 52.53% m-o-m to just 19,700 tonnes (t) in Apr’22 from 41,500 t in Mar, as per monthly data. Sales dropped sharply as pig iron prices remained steep on the back of a sharp surge in coal and steelmaking coke prices and also because allocations fell considerably, SteelMint notes.
Notably, no auctions were held from SAIL’s flagship Bhilai Steel Plant (BSP) in Apr, while Rourkela Steel Plant (RSP) saw the highest sales at 12,900 t during the month.
Prices elevated
SteelMint assesses domestic pig iron prices at INR 57,800/t exw Durgapur, basically stable m-o-m while higher by over 20% from prices prevailing in Feb.
Global coal and energy prices are on the ascendant due to supply chain disruptions since the outbreak of war in Europe. Australian premium coking coal prices are at historic-high levels of $517/t FOB. Prices have been on the rise over the last few months, witnessing an increase of over 20% m-o-m.
Similarly, blast furnace grade met coke prices continue to remain steep at INR 54,000/t in eastern India, as per SteelMint assessment on 5 May.
High base prices at auctions impacted buying interest: an auction on 27 Apr for 10,800 t from RSP received bids for just about 100 t, while another auction from IISCO on 29 Apr failed to attract participation. Some of these auctions re-conducted in the first week of May saw bids sinking considerably compared with base prices set earlier and alongside other merchant producers reducing prices slightly.
For example, bids fell by INR 2,100/t at an auction from RSP on 2 May after an auction in the last week of Apr received lukewarm response. The base price had been set at INR 58,000/t in the previous auction while material was booked at a weighted average price of INR 55,900/t in the beginning of May.
Prices, therefore, are inching lower as raw material prices witness correction and as demand remains subdued on elevated offers.
SAIL started conducting regular pig iron auctions from its plants in Jun’20 and sales had reached 0.66 mnt in CY’21. Crude steel production by the state-owned steel producer rose 14%, year-on-year, to 17.4 mnt in FY’22 compared with 15.21 mnt in the preceding fiscal.
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