In last 6 months, conversion from Sponge to Ingot/Billet drop by up to 1,500/MT.
Indian steel market has started improving on account of low availability of Ingot/Billet. SteelMint learned that falling conversion from Sponge to Ingot has put pressure on manufacturers. This has resulted in shut down of furnaces and rolling mills in major cities such as Durgapur, Raipur, Hyderabad, Jalna and Mumbai. The plants that were not able to stop production have reduced production levels up to 60-70%. Production cut and shut down of rolling mills is largely because of low finish buying.
Conversion from Sponge to Ingot has fallen over last 6 months in Durgapur by INR 1,000/MT and in Raipur by INR 850/MT. The highest loss is registered in Rourkela which has fallen sharply by INR 1,500/MT.
Conversion Table
Basic, Monthly average Prices, November’s prices are till 16th.
Shortage of Scrap has built an additional pressure on manufacturers. Weak rupee has put a hold on import of Scrap.
Over the last 6 months, Sponge iron offers have gone up by Rs 1,000-1,200/MT. However, Ingot/Billet prices have not increased as much. Market participants are of opinion that the semi finish offers may either stand at current levels or rise up; prices may not fall. Below are the reasons.
- High power cost making steel manufacturing costlier
- Low availability of Iron ore keeps Sponge Iron prices high
- Low conversion from Sponge to Ingot/Billet
- Price Pressure on both Integrated & standalone units
According to market participants, if pressure on semi finish market continues then market price will increase sharply. They expect demand for finished steel to improve from December which might support price improvement in semi finish market.
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