India: Pig iron sales drop 25% at SAIL auctions in Oct'21 on higher prices
Sales of pig iron at auctions conducted by Steel Authority of India Ltd. (SAIL) from its integrated steelworks in central and eastern India fell by 25%, month-on-month, t...
Sales of pig iron at auctions conducted by Steel Authority of India Ltd. (SAIL) from its integrated steelworks in central and eastern India fell by 25%, month-on-month, to 39,000 t in Oct'21 compared to over 52,000 t in Sep, as per data maintained with SteelMint.
Pig iron sales volumes in Oct dropped 13% compared to Aug. SteelMint data shows that SAIL has sold over 0.56 mn t of pig iron in the Jan-Oct'21 period.
Sales drifted down at SAIL auctions in Oct primarily because of prohibitively high base prices, although gradual recovery in supplies and falling coal and coke prices arrested the pig iron rally during the latter half of the month.
SAIL's Bhilai Steel Plant (BSP) in Chhattisgarh led from the front with 22,000 t of pig iron sales during the month, followed by 8,000 t of sales from Bokaro Steel Plant (BSL) and 6,800 t from the Rourkela Steel Plant. The PSU steelmaker's Burnpur and Durgapur steel plants witnessed sales at 1,500 t and 700 t, respectively, in Oct.
Outlook turns bearish
Supply shortage and healthy demand kept pig iron prices supported. Pig iron producers raised offers amidst rising steel and coal prices in the first half of Oct.
At SAIL's auction for 2,000 t of basic grade material on 12 Oct from BSL, the entire quantity was booked at a weighted average price of INR 45,650/t exw, the highest price to have been recorded at SAIL auctions thus far. Bid prices increased by INR 1,650/t compared to the previous auction on 6 Oct.
However, from the third week of Oct, steel grade pig iron prices started falling, with a significant decline of INR 1,000-1,700/t witnessed in the central, south and northern regions. Prices moved down on account of declining steel prices and weak demand on high offers that were floated by suppliers.
Likewise, towards the end of the month prices remained under pressure due to marginal improvement in supplies and decline in coal prices amidst lacklustre demand. Prices fell by INR 400-1,000/t in the central, eastern and northern regions in the fourth week of Oct.
Prices correct lower
With the outlook gradually turning bearish, the impact on SAIL auction outcomes became evident. BSL's auction for 2,000 t on 27 Oct failed to attract participation of any kind and closed without even a single bid being placed because the base price had been set at INR 44,500/t.
Similarly, at the SAIL-IISCO auction for 500 t on 26 Oct the weighted average price stood at INR 43,450/t exw, down INR 850/t compared to the previous auction on 6 Oct.
However, due to the cost push earlier and lingering supply issues weighted average prices for Oct edged higher vis-a-vis Sep. The weighted average price at BSP auctions in Oct jumped nearly 13%, m-o-m, in Oct to INR 43,595/t. At the same time, the weighted average price for RSP auctions inched up INR 5,000/t compared to Sep.