Indian sponge iron (DRI) prices have hit 40 months high on fresh deals. Current offers for Pellet sponge (P-DRI) are assessed at INR 20,000-20,100/MT (Ex-Raipur), INR 19,100-19,200/MT (Ex-Durgapur), INR 18,300-18,500/MT (Ex-Bellary). These prices were last noticed in August 2014.
Factors driving prices
1. Market fears iron ore supply may get impacted from Odisha, post Supreme Court’s order, which mandates miners to pay penalty related to illegal mining case
2. Strong export demand: Rising exports by steel manufacturers (specially based on coastal region) is supporting prices
3. Expensive scrap: With imported scrap prices moving up, mills prefer sponge iron or domestic scrap
4. Logistical bottlenecks: An acute shortfall of railway rakes meant for iron ore movement has hurt the supplies of the raw material to steel makers across the country. As rakes are getting increasingly diverted to meet the coal requirement of thermal power producers, there are not enough rakes to dispatch iron ore
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