Indian Sponge Manufacturers reduce Iron Ore Purchases on hope of Price Cut by Miners

Sponge iron manufacturers across India have reduced their Iron ore purchases on hope that domestic Iron ore prices will come down further. Iron ore prices in the domestic market have declined by upto INR 700/MT in the month of January after two miners received permission to extend their production to 15 MnT.

With mining ordinance being passed on 12 Jan’15, Sponge & Steel manufacturers believe that this will help mines to resume production very soon and declines the raw material prices further.

NMDC, India’s largest Iron ore producer, is planning to cut its prices for Feb’15 deliveries, according to sources.

“We are anticipating further correction in Iron ore prices. Till then, we are buying Pellets in a very limited quantity. We will not be surprised if Sponge iron ore prices come down from here owing to increase in supply”, said a Sponge iron manufacturer based in West Bengal .

On the other hand, Sponge prices have moved up slightly in Raipur & Durgapur by INR 300/MT and INR 200/MT respectively for the reason that plants are operating at lower capacities. Market participants believe that once Sponge plants start booking Iron ore and get deliveries; Sponge prices will come under pressure.

Iron Pellet Prices down by INR 200/MT

Iron Pellet prices have already declined amid lower demand and excess supply of Pellets. Deals have heard to be concluded at INR 6,200-6,500/MT in Odisha and West Bengal. Sources also say Pellet manufacturers are in talk to form cartelization in order to pressurize miners to reduce Iron ore fines prices further.

Prices in INR/MT with Weekly Change

Basic prices on ex-plant basis; ED & taxes extra
*as per loaded to wagon; including royalty & taxes extra