India: SAIL's Pig iron Auction Receives Improved Response on Reduced Base Prices

Steel Authority of India Ltd (SAIL) - India's largest steel maker conducted e-auction for 7,300 MT steel grade Pig iron today from its Rourkela Steel plant (RSP) based in eastern India.

As per participants report, the company reduced base price in today's auction by INR 300/MT (USD 4.5) to INR 27,100/MT (ex-plant) than the previous auction which was held on 9th Mar'19 for 10,550 MT.

If sources are to be believed, RSP has managed to book close to 3,000-3,200 MT pig iron at the base prices and remaining about 58% (4,200 MT) material remained unsold.

RSP's previous auction held on 9th Mar'19 received quite dull response as only about 1,000-1,200 MT (10-12%) material was sold out at the base price of INR 27,400/MT ex-plant.

Private producers reduce offers amid demand slow down

This week pig iron prices in central & eastern India have dropped by INR 200-400/MT (USD 3-6) due to weak demand. These markets contributes close to 60-70% of India's total pig iron production.

As per officials from the private pig iron plants, demand has remained slow due to significant drop in steel prices.

It should be noted that, the margins of steel mills continued drop over falling steel prices. The price gap between Pig iron & Billet has also reduced to INR 3,500-4,000/MT which was earlier close to INR 5,000/MT in central & eastern regions in the month of Jan-Feb'19. Hence the demand for pig iron being weakened with stockiest as well.

It is also learned that bookings with Neelachal Ispat (NINL) has remained limited in recent price circular indicating a roll-over. Steel grade is currently offered at INR 26,750-27,150/MT ex-plant, Cuttack, Odisha. As per close source with the company, nearly 15,000-20,000 MT material have been booked, which is less than the routine bookings. Thus, they are anticipating, company to cut offers in fresh price circular which is likely to be floated in coming week.

Updates -

1. Jindal Steel one of the regular supplier of Pig iron in Central region- Raigarh has reduced prices by INR 200/MT to INR 27,700-27,800/MT ex-plant. Meanwhile offers through the stockiest in Raipur hovering at INR 27,900-28,000/MT FoR & excluding GST.

2. Neo Metaliks one of the regular seller of Pig iron in merchant market, has slashed offers to INR 27,800/MT than the offers during last week at INR 28,000-28,200/MT ex-plant at Durgapur.

3. As per participants, MESCO Steels offer in Jajpur, Odisha for steel grade is hovering at INR 26,900/MT ex-plant. Meanwhile the company is being offering bulk purchase discount of INR 100-200/MT.

4. Bokaro, Jharkhand based Electrosteels Ltd has lowered offers to INR 27,600-27,800/MT ex-plant and as per officials small deals are taking place.

5. Coming to northern India, Ludhiana which is a stockiest market, the suppliers anticipate prices to come down in coming week days as booked material to be delivered soon which will increase material availability and prices might fall gradually. Latest offers for steel grade reported at INR 30,600-30,800/MT FoR & excluding GST.

6. Australian Coking coal prices have fallen slightly and currently hovering at USD 213-214/MT FOB Australia & USD 225-226/MT CNF India, for Premium HCC grade.