Indian DRI Prices stable at USD 325-365/MT Ex-Works

• Indian Sponge iron prices stabilize owing to delayed monsoon
• Sponge manufacturers prefer Pellets over Lumps
• Price difference between P-DRI & C-DRI widens upto INR 2,000/MT (USD 33/MT) from an average of INR 1,200/MT (USD 20/MT)
• Recent gazetted mechanism by Odisha government on 50:50 rule  concerns Iron ore miners

Indian DRI (Sponge iron) prices which have been volatile in last few weeks, seems to be stabilizing with offers varying from USD 325-365/MT (INR 19,500-21,900/MT) across India on Ex-Plant basis. DRI prices, which have shot up significantly in mid-May after the Supreme Court had suspended mining operations in Odisha, have gained resistance at these levels.

Indian Sponge Iron (C-DRI) & Pellet Sponge (P-DRI) Prices as on 2 Jul, 2014

Sponge iron contributes about 25% of Indian crude steel production (considering FY14 figures) and rest come from melting Scrap and blast furnace route.

Indian Sponge Manufacturers switching to Iron Pellet

With inconsistent supply of Iron ore lumps, Sponge iron manufacturers are switching to Iron pellets. They mentioned that procuring Pellets is much easier than procuring Iron ore lumps.

It is also noted that consumption of Pellets in Sponge iron making have increased upto 50-60% in last few years.

“Increasing Pellet plants in India will give some relief to Sponge iron units in near term. Atleast, there is regular supply and consistent quality. Most of us prefer Pellets over Iron ore. Apart from this,  we can buy Pellets in smaller lots of 500-1,000 MT,” said a medium sized Sponge manufacturer based in eastern region.

Scrap Imports will be impacted

India had imported around 7 MnT of ferrous Scrap in FY13 when Indian Sponge iron production stood at just above 18 MnT. In the next financial year i.e. FY14, Scrap imports had fallen to 4.5 MnT owing to weak INR and imposition of import duty , however Sponge iron production had raised to 24 MnT.

With increasing Sponge iron production using Iron pellets, it is expected that Scrap import will be limited.