The sponge iron producers in central, eastern & southern India shared with SteelMint that currently sponge iron prices are trading at lower levels due to limited trades and marginal fall in Iron ore prices. This has led to hand to mouth conversion spread (margins).
However as the selling pressure remained with the mills the participants believe, prices expected to remain under pressure and assuming it will negatively impact on raw materials too.
In conversation with sponge producers in eastern India, SteelMint analysed that iron ore prices are expected to come down in coming weeks as fresh bookings are limited, also the sponge iron plants are packed with hefty inventories of raw materials.
The data being showed surge in iron ore dispatches by about 44% of Serajuddin mines, which is the 2nd largest merchant miner in Odisha. The miner’s dispatches have hit close to 14 months high in Feb’19 to 0.87 MnT, up 44% as against 0.61 MnT in Jan’19. Also iron ore dispatches from OMC – state owned miner moved up 51% in Feb’19 and stood at 0.78 MnT as against 0.51 MnT in Jan’19.
Odisha based 300 TPD Sponge makers stated,“Buyers are very limited as of now, working with at-par value & expect iron ore offer may fall in the coming days”
Further in Central India – the sponge P-DRI manufacturers are under selling pressure over lowered selling price than the cost of production. The margins remained low from Raw Pellet to sponge P-DRI & manufacturers reported prices are at bottom level and if raw materials move down than there is scope for downtrend in sponge market. As per producers, on an average the price gap between raw pellet & sponge P-DRI should be near to INR 12,500-13,000/MT, which is currently at INR 12,000/MT.
Meanwhile in Southern India, the manufacturers are waiting & holding sponge P-DRI offers at close to INR 18,500/MT following marginal reduction in raw pellets prices which is currently hovering at INR 7,000-7,100/MT. Although the producers are eyeing for offers of INR 6,700-6,900/MT(6-20 mm, Fe 63%) as in general market these are not workable price, as per them.
SteelMint analysed that, demand is average at current offers of sponge iron, however if raw pellet or iron ore offers come down, sponge makers may be reluctant to cut offers as they have to clear piling stock.
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