Indian Sponge Iron Prices likely to be Range-bound – Reports

Despite rising scarcity of Iron ore in the domestic market, Sponge iron prices are unlikely to rise sharply, although correction is also limited. Market participants believe that prices may improve a bit owing to seasonal demand.

Participants mentioned that weak Iron ore prices in the global market will offset crisis in the domestic market. Indian Iron ore imports have boosted up sharply in this financial year. Total imports from Apr-Oct’14 are expected to be over 5 MnT against 0.3 MnT in FY14.

Indian Iron ore production is expected to fall to 136 MnT in FY15 against 152 MnT in FY14, which will be compensated by rising imports and falling exports of Iron ore from India.

“Sponge iron manufacturers are running their plants at below capacity level owing to crisis of Iron ore and coal. However, cheaper imports of Scrap, Steel and Iron ore have bounded the manufacturers to raise their prices. Iron ore imports have also started to pick up from middle scale steel companies,” said a Sponge iron manufacturer based in Kolkata.

On similar lines, Sponge manufacturers based in Chhattisgarh mentioned that there is limited scope of price rise as realizations are already low and anything below this will make Sponge production unviable.

It is noted that conversion gap for making Sponge iron to Ingot/Billet has fallen to INR 7,500- 8,000/MT, which should ideally be INR 8,500-9,000/MT.

Another Sponge manufacturer based in Karnataka mentioned, “JSW has started imported ore in a big way. The company’s purchases from the domestic market will certainly go down. We expect Iron ore prices will remain subdued in Karnataka’s e-auction.”

Scrap Imports may boost up 

Falling Scrap prices in the global market will benefit steel companies based on coastal regions. Participants expect that import of Scrap will move up to 5.5-6 MnT in FY15 against 4.5 MnT in FY14.

Qty in MnT
E-Expected
Source: SteelMint Research