Rising availability of Sponge Pellet in India’s eastern region, have restricted  hike in Sponge Iron prices. 

Despite low availability of Iron ore from Odisha, Sponge iron prices are not impacted to a large extent. Trend is likely to continue, as increasing merchant pellet availability will keep a check on Sponge iron prices in the coming months, according to industry experts.

Scenario is quite visible in states like Chhattisgarh, Odisha, West Bengal. Chattisgarh is the largest producing state of Sponge iron in India with an installed capacity of 11.8 MnT pa, followed by Gujarat and Odisha.

“Indian sponge iron prices are trading at same levels as compared to the last month (INR 18,500-20,500/MT). Low availability of Iron ore may sustain sponge Iron prices but increased Pellet productions along with Sponge Pellet supply, will keep prices under check”, said a large induction furnace owner based in Chattisgarh.

On similar lines, induction furnaces based in West Bengal and Odisha mentioned that, we have option of buying either Sponge Iron or pellet sponge. There is certainly low availability of sponge iron but that supply gap is fulfilled by increasing availability of Pellet Sponge.Most of them mentioned that scope of any sharp rise in sponge iron price is limited in near term.

Current offers in Raipur are at INR 20,100-20,300/MT and Sponge Pellet offer stand at INR 18,900-19,000/MT. Whereas Sponge iron in Raigarh is offered at INR 19,100-19,300/MT and Pellet Sponge is at INR 18,200/MT. (All Prices on Ex Works Basis)

SteelMint learned that current installed pellet capacity is just over 50 MnT and expected to touch around 80 MnT next year. However Sponge iron production is not increasing in proportion to Pellet capacity.

Indian Sponge Iron & Sponge Pellet prices (in INR/MT) as on date 18-Dec-2013 

Basic Prices on Ex- Plant Basis
Excise duty @12.36%; VAT as applicable.