Indian sponge iron export offers dropped to 21-months low since Jul’17, the prices are on constant on down trend due to bearish demand, strong supply and falling global scrap prices.
In latest assessment, sponge iron export trades from India have been reported at reduced prices of USD 316-318/MT CNF Chittagong, equivalent to USD 300/MT CPT Benapole(dry port of India & Bangladesh).
As per sources, one of biggest manufacturer in Chittagong, Bangladesh has booked 4,000 MT sponge iron (FeM 80, lumps) yesterday at near to USD 316-317/MT on CNF Chittagong basis.
Which all factors have lowered Indian sponge export offers ?
Demand-Supply mismatch: Sponge iron production has inched up in domestic market on rising capacities. However demand is weak in current circumstances as prices down significantly by upto INR 1,000/MT (USD 14) in May’19 and currently hit 16 months low in eastern region. As per data maintained by SteelMint, India’s sponge iron production grew by 2.9% to 30.36 MnT in CY18.
Falling imported scrap offers: Bangladesh is the major buyer of Indian sponge iron and with falling imported scrap offers in Bangladesh, India’s sponge iron demand gone on negative direction. This week, imported scrap offers to Bangladesh fell by USD 10-15/MT due to weak demand and falling prices globally. Bangladeshi mills are largely depend on melting scrap to produce steel and the sponge iron melting proportion is less than of 5%. Hence in general scrap offers in country, determine sponge iron price range.
Ongoing festive season: The local mills in Bangladesh reported narrowed down productions by about 30% due to Ramadan festival which began from 6th May and will be end in first week of Jun’19. Amid seasonal lower export demand forced exporters to deal in low price range.
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