India: SAIL Pig Iron Auction Fetches Bid Higher by INR 3,800/MT on Limited Supply

Steel Authority of India Ltd (SAIL) has received bids higher by INR 3,800/MT for pig iron which was auctioned from Rourkela Steel Plant (RSP) on 4th Jan 2020, SteelMint learned from market participants.

SAIL had offered 3,900 MT steel grade pig iron at a base price of INR 26,450/MT (company had raised base price by around INR 3,000/MT against last auction which was held on 18th Dec'19).

Company managed to sell entire quantity at a weighted average price of INR 30,300/MT Ex-Rourkela, SteelMint learnt from market sources.

Driving Factors

1. Private pig iron producers have kept their offers on hold owing to sharp increase in steel prices and unclear direction.

2. Indian iron ore prices have increased by INR 500-1,000/MT in last few days on fear that mining auction may disrupt supplies in domestic market. Market expects prices may rise further.

3. Neelachal Ispat Nigam Ltd (NINL), state owned and largest merchant steel grade pig iron producer has been out of operations for last few months on financial issues. Neelachal used to produce around 700,000- 800,000 MT steel grade pig iron every year.

4. Sources report that Indian mills have cancelled pig iron export tender on better realizations in domestic market.

SteelMint's assessment for steel grade pig iron price stands at INR 27,100-27,500/MT ex-Durgapur, INR 28,500-29,000/MT FoR Raipur, INR 28,600-29,000/MT FoR Raigarh & INR 29,400-29,700/MT FoR Ludhiana, excluding GST.