India: Pig iron sales at SAIL auctions rise 75%, m-o-m, in Dec'21

• Steel major records pig iron sales at 0.66 mn t in CY'21
  
  
• Sales decline in H2CY'21 on rise in domestic merchant production
  
  
• Export demand to drive prices
  
  

Pig iron sales at auctions conducted by SAIL in Dec'21 from the state-owned company's steel plants across eastern and central India rose sharply by 75% month-on-month to 63,350 t from 36,300 t in Nov, as per data maintained with SteelMint.

Total sales at SAIL auctions in CY'21 stood at over 0.66 million tonnes (mn t), data reveals.

Although auctions held in Dec witnessed brisk sales due mainly to low prices, volumes dropped year-on-year from over 100,000 t in Dec'20.

Out of total sales in Dec, around 50%, or 30,700 t, was from Rourkela Steel Plant (RSP), while sales from the Bokaro and Bhilai steel plants were recorded at 16,000 t and 15,000 t, respectively.

Merchant output rises

Notably, sales at auctions fell in Q3 and Q4 of CY'21 compared to the previous quarters. This could be traced to the rise in domestic merchant pig iron production, SteelMint notes.

India's merchant pig iron production reached 4.67 mn t in Jan-Oct, with production in the first 10 months of the year climbing higher than total production of 4.17 mn t in 2020.

Apart from the fact that the pandemic-induced lockdown impacted production in 2020, pig iron output in Q3 of CY'21 edged higher on expansion in output volumes reported by producers.

Leading pig iron producer Vedanta Ltd., for instance, ramped up output in Q3 by 39% y-o-y due to better operational capacity of its furnace after re-lining.

Price scenario

SteelMint's benchmark steel grade pig iron prices in West Bengal's Durgapur corrected from INR 46,500/t exw in mid-Oct to INR 37,000/t in the first week of Dec.

However, domestic pig iron prices found support in Dec on rising export sentiments and spiraling prices of metallurgical coke as import prices of coking coal rebounded. Prices in Durgapur currently stand at INR 39,800/t exw.

SAIL's management had called off successive auctions in early-Dec due to low price realisations. However, bids rose towards the latter half of the month.

SteelMint assesses weighted average prices of pig iron at INR 37,660/t at auctions from SAIL's flagship Bhilai Steel Plant (BSP) in Dec, a decrease of over 6% from INR 40,250/t in Nov. Likewise, weighted average prices were at INR 37,300/t from RSP in Dec -down 4% from INR 38,900/t in Nov.

Domestic pig iron prices are expected to remain supported on higher export demand in the coming days.