Sponge prices in central and eastern India have shown downside. Smelters in Raipur are preferring to source sponge from eastern India – Durgapur & Odisha.
Sponge iron prices in Durgapur – East India fell which lead to price fall in Central Indian markets too. After power supplier – Damodar Valley Corporation resumed power supply on 21st Sept, since couple of days power cuts have again resumed in Durgapur.
As per major producers in Durgapur the local demand for sponge iron is poor, which has forced them to cut prices. Meanwhile as the prices are cheaper in Durgapur, the smelters in Raipur – Central India has turned towards sponge purchase from Durgapur.
As per participants, the landed cost of Sponge pellet (P-DRI) from Durgapur at around INR 22,600-22,800/MT FoR Raipur & excluding GST. However the local producers in Raipur are offering material in the range of INR 23,000-23,500/MT ex-plant & excluding GST.
As a result the sponge manufacturers in Raipur are unable to fetch bookings, leading to rise in inventories and significant fall in prices.
Today the offers for Sponge P-DRI in Durgapur hovering at INR 20,800-21,000/MT ex-plant. The freight cost via road from Durgapur – East India to Raipur, Central India at around INR 1,700-1,800/MT. Thus landed cost to Raipur will come around INR 22,600/MT against Raipur offers at INR 23,000-23,500/MT
Another key factor behind falling sponge prices in central India is improved productions of sponge iron along with the better logistics of raw materials and clear weather which has increased productivity.
— An integrated plant in Raipur have reduced Sponge P-DRI prices by INR 1,000/MT in last couple of days and the latest offers stood at INR 23,000-23,100/MT ex-plant & excluding GST.
— Similarly in Durgapur where as per sources, Rashmi Metaliks – a price trend setter for Sponge iron has reduced prices by INR 500/MT day-on-day and fresh offers assessed at INR 21,000-21,1000/MT.
What May Happen
As per Industry experts, the sponge iron prices in South region are likely to come under pressure soon as buyers of Western India may turn for Central & East Indian sponge which is dip almost by INR 1,500-2,000/MT (USD 21-28); raising price competitiveness amongst major sponge producers.
Current offers for Sponge P-DRI in South India – Bellary evaluated at INR 23,400-23,600/MT ex-plant & excluding GST.
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