In August 2022, the conversion spread from sponge iron (PDRI) to billet decreased by 6% in Raipur and Durgapur. In contrast, the conversion spread in July had increased by 5% in Durgapur and 2% in Raipur.
According to data compiled by SteelMint, the average monthly conversion spread from sponge P-DRI (pellet-based DRI) to billets in Raipur was around INR 14,262/t and in Durgapur around INR 15,368/t in August.
The conversion rate on 2 September was assessed at INR 14,300/t in Raipur and INR 15,400/t in Durgapur.
Why margins fell?
Domestic sponge iron prices decreased only slightly throughout August, but billet prices decreased significantly. August saw a lot of pressure building on market participants due to declining steel prices. The market went through a hard time in an effort to stabilise due to weak demand for finished steel.
Sales of finished steel in the main production regions were moderate because buyers resisted purchasing at higher offers floated by the mills. Overall, moderate finished steel demand caused billet prices in Raipur and Durgapur to fall throughout the month.
Price overview
- In both locations, the monthly average price of billets decreased by INR 450-1,000/t in August. About 73,620 t of billet deals were recorded in Raipur in Aug’22.
- However, during August, the monthly average price of sponge iron increased slighly by INR 20/t in Durgapur and INR 550/t in Raipur. About 91,400 t of PDRI deals were recorded in Raipur in Aug’22.
Outlook
It is unlikely that margins of billet producers will increase this month. There may be minor changes in the conversion spread in September as the prices of sponge iron and billets are likely to stay under pressure.
.jpg)
Leave a Reply