Indian Sponge Iron Market remains Unchanged; Buyers Skeptical

Indian Sponge iron prices remain unchanged this week. 79-80 FeM Sponge iron (C-DRI) prices are assessed at INR 17,800-19,700 /MT and P-DRI of grade 79-80 FeM at INR 17,000-18,100/MT. Falling domestic Pig iron and imported Scrap prices have created pressure on Indian Sponge iron market.

Iron Ore Supply improves; Buyers wait for further Correction

Increasing domestic production of Iron ore and high imports have improved overall supply of ore in the market. Prices are under pressure owing to low off take and increased supply. Current offer for Calibrated lump (5-18 mm) is INR 5,500/MT and for fines (Fe 63%) is INR 2,600/MT ex-mines, Odisha (prices including royalty). Many Sponge manufacturers in Central and East India are waiting for further price correction of around INR 300-500/MT by NMDC and Odisha based private miners. Few miners have postponed the buying and purchasing Pellet to meet the short-term requirement.

Pellet Prices may come down further

Pellet prices have already come down by INR 300/MT after opening of January prices. Participants expect prices may come down further on increased production from big manufacturers like Essar, BRPL and Jindal Steel. Also, Tata Steel has cut down its Iron ore/Pellet purchases from merchant market, which will also add on to increased supply.

Key Highlights

1. SAIL has reduced Pig iron offers by INR 600/MT and offering Steel grade at INR 20,100/MT ex-Rourkela. In addition, the company is providing discount of upto INR 700/MT on purchase of bulk quantity.
2. Pellet prices have hit 10-month low. Fe 63% grade is being offered at around INR 6,000-6,300/MT in Odisha.
3. Imported Scrap prices have fallen by USD 5-10/MT. HMS 1&2 prices are assessed at USD 300-305/MT and Shredded at USD 320-325/MT, CIF Nhava Sheva (Mumbai).
4. Iron ore prices have touched at five and a half years low in China. Iron ore export from India has fallen significantly.
5. Odisha 50:50: Sources report that some miners have started delivering ore to Sponge manufacturers as per allocations made by the Odisha government.