India: SAIL BSP Receives Poor Response in its Recent Pig Iron Price Circular

Steel Authority of India Ltd (SAIL) had floated offers of basic grade pig iron from its central India based Bhilai Steel Plant (BSP) on 15th Feb'20.

As per market sources, the company offered its basic (steel) grade pig iron at around INR 28,200/MT EXW-Bhilai, Central India and about 20,000 MT pig iron was offered for sale in merchant market.

However, participants reported poor participation in the same as only about 2,000 MT bookings were made by local traders and furnaces as well. While, the remaining about 90% material remained unsold.

Sources believe that declining steel prices along with competitive offers by local producers could be the reasons for weak demand of BSP's material. In addition, the availability of substitute products in the market also contributed to the poor participation of buyers.

As per buyers (stockiest), the offers through Raipur based premium grade pig iron manufacturers for steel grade is hovering at INR 28,000-28,200/MT ex-plant.

Inline with this, melting scrap of heavy material is available in Raipur in the range of INR 24,500-25,000/MT ex-works & excluding GST.

Thus, the mills as well traders in central India are cautious to book pig iron in major quantities. They are further preferring to purchase substitute products offered by private mills at attractive prices rather than booking from government owned mills.

Recent auction held by SAIL from its Rourkela Steel Plant (RSP) on 19th Feb'20 for 2,450 MT pig iron, also got weak participation on account of falling steel prices and competitive offers through the private mills. SAIL RSP's base price for the auction was INR 27,800/MT EXW-Rourkela and was able to sell only about 250 MT pig iron at the base price, while remaining of 2,200 MT (90%) material remained unsold. The next auction for the sale of the remaining material is scheduled on 26th Feb'20.