Sponge Iron prices in India look robust owing to less number of merchant sellers. SteelMint learned that many Sponge units are running under capacity due to monsoon and their productions are only up to the captive requirement.
Raipur (Chhattisgarh) produces 25-30% of Sponge Iron contributing in the country's total production of 19.76 MnT pa FY13. From last year many sponge units have gone for forward integration and commenced the Billet/Ingot manufacturing units. Market sources say that, “Only few merchant plants are operating and most of them are producing Sponge Pellet which caused Sponge Iron shortage in the state, out of 55 units only 12-13 units are selling sponge Iron in the market”. Sponge prices in Raipur increased by INR 800/MT in last 10 days, whereas, MS Ingot prices increased by INR 200-300/MT.
A similar scenario can be seen in West Bengal, Orissa and Karnataka, the only Sponge producing state. In last few days Sponge price has increased by INR 700-900/MT W-o-W due to limited production.
Indian Sponge Iron prices, which had corrected to 2-years low in the month of July 2013, had recovered back sharply owing to low production and Scrap shortage. Traders and manufacturers say that prices are likely to be in high range due to limited Sponge supply and Iron ore shortage.
India is the largest Sponge Iron producer in the world with an annual production capacity of around 19 million tonnes. However production is way below the installed capacity according to Sponge Iron Manufacturers Association of India (SIMA).
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