Sponge iron prices have corrected by upto INR 600/MT W-o-W and are likely to witness further correction in coming days. According to market participants, increasing supply of Iron ore in the domestic market and lower exports of finished steel are the prime reasons for correction.
Odisha Iron Ore Supply increases
Iron ore supply is improving in India after the Supreme Court had temporarily suspended mining operation in Odisha/Jharkhand. Additional 16.5 MnT capacity expansion has been granted to two running mines in Odisha.
- Odisha government has made Iron ore (lump) allocations to state based industries at a price lower than market value
- NMDC’s Iron ore production has also increased by 11.5% Y-o-Y for 9-month (Apr’14-Dec’14)
- Iron ore imports hit an all time high of 9.5 MnT in FY15 (Apr’14-Dec’14)
Falling Export of Finished Steel
Falling steel export poises a major threat to Indian steel market as most of the primary manufacturers try to sell their finished or semi finish products in the domestic market, which has increased supply and put pressure on prices.
“RINL export tender of Billet & Pig Iron has failed to receive a attractive bid compared to domestic offer in December,” said a Billet trader located in Mumbai.
He added, “Supply from primary producers in secondary market has increased in last couple of months as JSW Steel plant has also offered Sponge iron to Wada & Jalna based furnace at competitive price.
Trade-wise
- Odisha based manufacturers offering C-DRI (79 FeM) at INR 19,300/MT delivered to Raigarh (Central India)
- Singhal Enterprises offer C-DRI (0-20 mm) at INR 19,300/MT & P-DRI at INR 18,000/MT ex-Raigarh
- SKS, Raipur based Sponge Iron manufacturer selling Sponge Iron (DR-CLO; 0-20MM) at INR 20,500/MT
- A trader based in Bellary (Karnataka) offering P-DRI (75 FeM) at INR 16,800/MT ex-works
- P-DRI (78 FeM) in Jharsuguda traded at INR 17,300-17,400/MT; advance payment
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