Indian Sponge iron prices are under pressure on falling Scrap prices in the global market and decline in Iron pellet prices in Indian domestic market.
Indian Sponge iron prices which stood firm from last few weeks owing to raw material issues have shown some resistance. The resistance is shown because of cheaper imports of Scrap from Europe & Middle East and availability of Iron pellet at discount, puts pressure on prices.
Falling Scrap Offers in Global Market
SteelMint in a discussion with market participants has assessed that in the coming week’s Sponge prices is likely to remain under pressure owing to improve supply of imported Scrap. Sources said, imported Scrap offers which were hovering in the range of USD 375-380/MT CFR Mumbai in January, have fallen to USD 360/MT. They also mentioned that a lot of trade had took place in last few days and delivery will be made in the month of March.
Increased availability of Pellet in Indian Market
Another reason that makes Sponge prices under pressure is decline in exports of Iron pellets. In Jan’14, export of Iron pellet has witnessed sharp decline which has resulted into over availability of Pellet in the country leading to fall in Pellet prices in domestic market.
Chhattisgarh, India’s major Sponge manufacturing state, with an installed capacity of around 11.8 MnT pa has noticed price gap of around INR 1,500-1,600/MT between Sponge iron & Sponge pellet . Current Sponge iron offers in Raipur (78 FeM) are at around INR 21,200/MT (USD 340/MT), while Sponge pellet stand at INR 19,600/MT (USD 315/MT).
Similarly in Durgapur, one of the largest Sponge producers in the country has the price gap of around INR 1,400-1,500/MT between Sponge pellet & Sponge iron. Sponge iron prices in Durgapur (WB) stand at INR 20,100/MT (USD 325/MT) and Sponge pellet traded at about INR 18,700/MT (USD 300/MT). Reduced Pellet prices and low sales of the material (Sponge) may cut Sponge offers further.
However in Bellary & Rourkela, prices are standing at the same levels from past few days. Sponge iron (78FeM) in Rourkela is offered at INR 19,100-19,200/MT, while Sponge (75 FeM, lumps) in Bellary stand at INR 19, 500/MT.
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