Go to List

India: Limited SAIL pig iron allotments may lead to supply tightness, firm prices

Pig iron volumes allotted from The Steel Authority of India’s (SAIL’s) recent e-auctions have been on the lower side. SteelMint’s data revea...

Pig Iron
By
694 Reads
15 Jul 2021, 13:00 IST
India: Limited SAIL pig iron allotments may lead to supply tightness, firm prices

Pig iron volumes allotted from The Steel Authority of India's (SAIL's) recent e-auctions have been on the lower side. SteelMint's data reveals, total volumes allotted from the PSU major's flagship Bhilai Steel Plant (BSP) till 14 July'21 was at 2,500 t, while its total allotted volume was a mere 18,500 tonnes (t).

The Jun'21 allotted volumes from BSP were sharply down to 8,650 t from 33,700 t in May, a sharp 74% drop m-o-m. SAIL's total pig iron allotted volumes in Jun'21 were down 57% to around 34,000 t against 78,700 t in May.

Lower sales realisations in pig iron at SAIL BSP was the reason for the increasingly lower allotments, SteelMint learnt. The mill thus opted to boost its semi-finished steel output, rather than sell pig iron in the domestic market.

The total merchant pig iron market in India is pegged at 4.8 million tonnes (mn t), down 11% over FY'20. Around 3.8 mn t comprises steel grade while the balance is foundry-grade. SAIL alone commands around 15% of the merchant market, offering around 0.6 mn t per annum via e-auctions, with quantities varying from month to month.

Implications

Tight supply: With decreased volumes allotted by a leading merchant player like SAIL, there is bound to be limited supply of pig iron in the short term.

Domestic prices to stay firm: As a consequence, prices of pig iron are expected to stay supported in this period too. Prices have gained considerably since Feb'21. In Feb, BSP's prices were at INR 32,200/t. However, these rose to INR 36,050/t in Mar, edged up further to INR 39,300/t in Apr'21, dropping off slightly to INR 38,850/t in May and INR 38,350/t in Jun.

Prices at SAIL's other plants too have been firm in June, ruling at INR 37,200/t in Rourkela Steel Plant (RSP) to INR 38,700/t in Durgapur Steel Plant (DSP).

Higher exports to support prices

Export demand is good, SteelMint heard. Recently, a mill concluded a 30,000-t tender for the basic grade at $510/t FoB. There are more overseas enquiries for Indian pig iron at the current price levels, a source said. "If further deals happen, then domestic supply would get even tighter, keeping prices further supported," said the source.

Outlook

If export realisations are equivalent or higher than domestic prices in the near term, prices may not only stay firm but show an uptrend. "Therefore, chances of price falls from here are limited for the short term," corroborated a source.

 

15 Jul 2021, 13:00 IST

 

 

You have 1 complimentary insights remaining! Stay informed with SteelMint
;