Sponge Iron prices in Bellary (Karnataka) moved up by almost INR 300-400/MT, on unreasonably higher bids placed by big manufacturers in latest e-auction conducted by NMDC.

 Small and medium Sponge iron manufacturers, who are already fighting for their survival in southern India, have nothing to cheer for looking at rising Iron ore prices in latest E-auction conducted by NMDC.

Sponge manufacturers blame that big manufacturers are intentionally placing unreasonably high bids for Iron ore which is placed on advanced E-auction by NMDC, just to keep small and medium players out of the market.

“[su_quote]In the recent auction, Iron Fines prices have been bid at level of INR 4,000-4,100/MT for 60% Fe grade on Ex-mines basis, which further attracts a forest development tax and royalty of 22%. Overall landed cost of 60% fines turn out to be INR 5,300-5,500/MT. These prices are not workable for any of the medium and small plants. Some of Karnataka based Pellet and Sponge manufacturers have also started exploring sourcing opportunities in Odisha, said an official, with one of the Pellet manufacturers based in Hospet.[/su_quote]

On the similar lines, Sponge manufacturers in Karnataka also mentioned that almost 50% of installed units are non operational and the other 50% are working much below their capacity. With rising Iron ore and Pellet prices, the other 50% will have no choice but to raise Sponge iron prices or cut down their production further.

Karnataka contributes almost 12% of India’s total Sponge iron capacity of around 40 MnT. In FY13, production of Sponge iron fell to less than 19 MnT, a decrease of 26% in two years. India contributes about 30% of global Sponge iron production.

Current prices (in INR per MT)

Ex-works, Basic Prices
Excise duty @12.36; VAT as applicable