India: SAIL's Pig iron Auction Receives Poor Response

Steel Authority of India Ltd (SAIL) - India's largest steel maker conducted e-auction for 10,550 MT Steel grade Pig iron today from its Rourkela Steel plant (RSP) based in eastern India.

As per participants, the company has received quite dull response as about 1,000-1,200 MT material was booked, while remaining about 88-90% material remained unsold.

The reason behind weak response highlighted is higher base prices as offers from neighboring manufacturers are cheaper by INR 300-500/MT on ex-plant basis.

In the today's auction, RSP had kept base price similar to last auction at INR 27,400/MT (ex-plant), however offers by the local manufacturers in surrounding markets hovering in the range of INR 26,700-27,200/MT ex-works. Hence the buyers preferred to hold back bookings with RSP.

Another reason cited by sources was sufficient availability of material with the traders and plants as well. This has resulted in poor buying interest in SAIL's auction.

Prior to this RSP's pig iron auction was held on 5th Mar'19 for 13,800/MT, in which about 3,000 MT pig iron was sold out at the base price of INR 27,400/MT ex-plant.

Private producers lower offers -

The private pig iron producers in Durgapur & Jharkhand, eastern India see looking for bulk buyers, hence discount being offered was usual. Although as the buyers remained less interested for bulk bookings, the producers reduced offers by INR 100-200/MT this week.

The current offers for steel grade in Durgapur hovering at INR 27,800-28,000/MT as against last week at not less of INR 28,000/MT, ex-plant. Similarly the suppliers in Jharkhand are agree to deal at last week offers of INR 27,600-27,700/MT than the increase offers of INR 27,700-28,000/MT ex-plant.

Further the suppliers in Central region have gradually decreased offers to INR 28,100-28,200/MT as against last week at INR 28,200-28,300/MT, FoR Raipur.

Market expects Indian steel prices to remain range bound or slightly find support, however if this does not happens and prices fall then pig iron producers also have to cut offers as buying interest will remain bearish.