India: SAIL pig iron auction sales volumes up 35% m-o-m in Aug'21

Pig iron sales at auctions conducted by PSU steelmaker SAIL increased by over 35%, m-o-m, to nearly 45,000 t in Aug'21 compared to a little over 30,000 t in Jul. However, prices came under a cloud due to weak finished steel outlook, SteelMint notes.

Allocations for auctions by the steel major still remained substantially lower than the average recorded in the Jan-May'21 period, SteelMint data shows.

As reported by SteelMint earlier, allocations by SAIL dwindled in the face of reduced sales realisations for pig iron compared to semi-finished steel prices in the market, which had gone some way into driving pig iron prices higher in Jul.

Prices fell from mid-Aug

However, with semi-finished steel prices coming under pressure from mid-Aug onwards, pig iron prices at SAIL auctions inevitably came under pressure. This happened due to the correction in iron ore and pellet prices in the domestic market. Nevertheless, allocations by SAIL subsidiaries improved by and large, save marginal exceptions.

SteelMint reported 8,000 t of basic grade pig iron being sold at SAIL's flagship Bhilai Steel Plant auction on 13 Aug. Buyers booked the entire quantity at a weighted average price of INR 39,030/t exw.

However, SAIL's auction for 2,850 t of pig iron on 25 Aug from Bokaro Steel Plant, with the base price at INR 38,000/t, was unable to attract buyers. The auction closed without a single bid, while at the previous auction on 18 Aug, 2,000 t of material had been booked at INR 38,200/t exw.

Prices slide

Steel-grade pig iron prices dropped by INR 300-1,000/t across regions due to lukewarm demand on fast-dropping steel billet prices towards the latter half of the month.

In addition, falling export realisations forced pig iron producers to improve supply in the domestic market, which ultimately put pressure on prices.

SteelMint's weighted average prices for pig iron sales from Bhilai Steel Plant are assessed at INR 38,850/t - higher compared to Jul. Similarly, for the Rourkela and Bokaro Steel Plants weighted average prices in Aug stood at INR 37,910t and INR 38,200/t - higher compared to Jun.

Allocations at SAIL pig iron auctions will likely continue on a low key as long as semi-finished steel prices remain depressed in the domestic market, SteelMint notes.