Vizag Steel Plant conducted an auction for 1,000 t of basic grade pig iron on 26 Jul’21. The entire quantity was booked at INR 37,600/t exw, sources informed SteelMint. The bid price dropped by INR 350/t ($4/t) compared with the previous auction on 7 Jul. At the previous auction, a similar quantity had been booked at INR 37,950/t exw.
At Vizag Steel Plant’s auction for 3,150 t of pooled iron on 24 Jul’21, buyers booked 3,150 t at a weighted average price of INR 33,650/t exw, sources informed SteelMint. Bids increased by INR 50/t compared to the previous auction on 16 Jul, which was concluded at a weighted average price of INR 33,600/t exw.
Sources from a Karnataka-based primary mill have reported that offers for granulated pig iron (GPI) are at INR 37,250/t exw. The plant has recently started offering GPI in the merchant market and is heard to be supplying to Maharashtra- and Gujarat-based plants. Meanwhile, steel grade pig iron offers through traders have been reported at INR 40,000-40,200/t FoR Hyderabad. Domestic pig iron prices are going strong due to limited supply by state-run plants at a time of robust demand from domestic and global buyers.
PSU steelmaker Steel Authority of India Ltd (SAIL) has scheduled an auction for 3,400 t of steel grade pig iron (in 34 units) from Rourkela Steel Plant in Odisha on 28 Jul’21. At the previous auction on 16 Jul, 3,000 t of pig iron was booked at INR 37,150/t exw, as per SteelMint reports. Bid prices increased by INR 950/t ($12/t) compared to the previous auction on 9 Jul. On the same day, i.e. 28 Jul, SAIL’s IISCO Steel Plant too has scheduled an auction for 500 t of pig iron.
Close on the heels of the 15% steel export tax announced in Jun’21 from Aug-Dec’21, Russia has now brought about another export tariff change, this time in pig iron.
The country has halved the export tariff on pig iron by just over half to $54/tonne (t) but where the 15% steel export tax also applies since pig iron has been reclassified as a steel-making raw material.
As per news, Russia’s pig iron exports would have been subjected to a $115/t or 15% — whichever is higher- export tariff. However, the Russian government has now reduced the $115/t rate to $54/t, but he has left the 15% tax floor unchanged. For this reason, market sources feel the actual tariff will be lower by only $25-$30/t and not by $61/t.
For instance, with the current FoB Black Sea pig iron price at $580/t, the 15% rate of $87/t will be applicable, being higher, to Russia’s pig iron exports and not the $54/t as the tariff revision seems to suggest.
The Black Sea FoB pig iron price needs to plunge to $350/t for the $54/t rate to be applied instead of 15%, which is highly unlikely, feel marketmen.
It seems the Russian government has initiated this move on the request of a major pig iron exporter, Industrial Metallurgical Holding (aka Tulachermet).
The tariffs will apply to direct reduced iron and hot briquetted iron (alternative steel-making raw materials).
Russia’s pig iron exports
Russia’s pig iron exports in the first six months of CY’21 (Jan-Jun’21) were at 1.32 million tonnes (mn t) compared to 1.74 mn t seen in the same period in CY’20, a decline of 24%.
The main importing countries were the US (0.42 mn t), Turkey (0.28 mn t), China (0.25 mn t) and Italy (0.19 mn t).
India, on the other hand, exported 0.41 mn t of pig iron in H1 CY’21 compared to 0.44 mn t in Jan-Jun’21, down 7% on the year.
However, even the reduced export tariff means some extra financial burden on Russian pig iron exporters which would likely make them less active in the seaborne market.
A pig iron exporter from India said it is good news for the Indian players. “New markets of Turkey and Europe, which are being supplied by Russia at present, will open up,” said the official.
On the other hand, another source said the 54/t rate will hardly apply at the present Black Sea FoB price levels since the 15% steel export tax will be higher.
“So the 15% export duty will prevail. However, it will benefit India if China’s demand is there,” the source added.
Tata Metaliks Ltd (TML) has increased foundry grade pig iron prices by 2%, or INR 800/t ($11), to INR 41,800/t, while basic grade pig iron (Si 1-1.15%) prices rose by INR 500/t to INR 39,200/t. Prices are exw-Kharagpur and applicable for the Kolkata and Howrah markets.
- Pig iron prices in the domestic market remain strong, resulting from active demand amidst limited supply by the state-owned mills.
- As reported by SteelMint, TML had concluded one rake (around 2,200 t) of basic grade pig iron (Si 1-1.15%) tender at around INR 41,800/t FoR Phillaur siding, Punjab on 22 Jul’21.
At SAIL’s auction for 6,000 t of basic grade pig iron from its Bhilai Steel Plant (BSP) in Chhattisgarh on 22 Jul’21, buyers booked 5,900 t at a weighted average price of INR 37,900/t exw, sources informed SteelMint. Bids increased by INR 650/t ($8) compared to the previous auction on 10 Jul, which was concluded at a weighted average price of INR 37,250/t exw.
Tata Metaliks has floated a tender for one rake (around 2,200 t) of basic grade pig iron (Si 1-1.15%) today. The tender received good response as it settled at around INR 41,800/t FoR Phillaur siding in Punjab, sources informed SteelMint. On 19 Jul, the company had raised prices for basic grade pig iron by INR 700/t for the Kolkata and Howrah markets.
Pig iron prices in major locations across India continued to rise on account of active demand and slight supply shortage due to subdued production by the state-owned mills. Steel grade pig iron prices in the domestic market rose by INR 1,000-1,200/t w-o-w, as per SteelMint assessment.
Active demand, slight supply crunch and rising billet prices are supporting the Indian pig iron industry, SteelMint learnt from sources.
Plants based in Durgapur have raised offers for steel grade pig iron to INR 37,700-38,000/t, as against deals that happened yesterday at INR 37,300-500/t exw.
Sentiments remain strong on the foundry grade pig iron market, with fresh deals for Delhi (NCR) regions being heard at INR 44,200-300/t. The floated offers are at INR 44,400-44,500/t, on DAP basis.
State-owned leading long steel producer, Vizag Steel, has scheduled two e-auctions, as per reports. While the company has announced an auction for around 3,150 t of pooled iron on 24 Jul’21, another 1,000 t of pig iron will be auctioned on 26 Jul. The steelmaker’s previous pooled iron auction was concluded at INR 33,600/t and pig iron auction at INR 37,950/t, both on exw basis.