Previously, the Indian Sponge manufacturers were anticipating that prices will find some stability after declining by INR 800 /MT W-o-W and INR 1,500/MT M-o-M. But at present, the buyers are expecting further price correction because of weak imported Scrap offers and slipping Iron ore prices.
In current scenario, Odisha government has mounted pressure on merchant miners to increase dispatches in order to fulfill the state royalty target for FY15. As a result, Sponge makers believe that Iron ore prices in Odisha may fall further. Iron ore miners in the state have corrected prices by upto INR 1,300/MT. Whereas, NMDC has reduced prices only by upto INR 450/MT in last 1-month.
Sponge Manufacturers prefer Iron Pellet over Calibrated Lump Ore
Declining Iron ore prices and liquidity crunch in the market have forced many small Sponge manufacturers to shift from Iron ore to Iron Pellet as purchase of 1 rake of Iron ore (3,850 MT) from Odisha or NMDC cost higher than Iron Pellet. Cost of Calibrated Iron ore (5-18 mm; Fe 62%) from Odisha to Raipur based unit is INR 7,000MT, FoR. Whereas, Iron Pellet of Fe 62-63% grade is available at INR 6,500/MT in small quantity. Similarly in West Bengal, Iron Pellet is offered at INR 6,000/MT, whereas, Iron ore at around INR 7,200/MT, FoR.
Trade-wise
- Iron Pellet prices in Odisha have hit an all time low. Fe 63% Pellets in Barbil is offered at INR 5,200/MT and in Jharsugda at INR 5,800/MT
- Chhattisgarh based manufacturers are offering Fe 63% Iron Pellet at INR 6,400-6,500/MT
- Pellet prices in Karnataka remain stable to a certain level as manufacturers continue to operate at low capacity. Fe 62/61 Pellets prices are assessed at INR 6,700-6,900/MT ex-plant
- Indian importers are offering South African lump (6-40 mm, Fe 64%) at USD 82-84/MT, CIF East Coast India, as per a steelmaker
- Consistently declining Scrap prices in the global market worry Indian Sponge makers. Shredded Scrap offers from UK have came down to below USD 280/MT (down by USD 10-15/MT W-o-W)
- Continuous falling Scrap offers from Europe by over USD 40/MT in last 1-month will hit Sponge iron prices in near-term
Sponge Iron Prices as on 12 Feb’15
| Region | Particular | Grade (FeM) | Price | W-o-W | M-o-M |
| North India | Mandi Gobindgarh | 78-80 | 21,800 | – 500 | – 1,000 |
| East India | Rourkela | 78-80 | 16,800 | – 400 | – 1,100 |
| Durgapur# | 78-80 | 17,800 | – 800 | – 1,400 | |
| Central India | Raipur | 80 | 18,200 | – 700 | – 1,400 |
| Raigarh# | 79-80 | 18,000 | – 800 | – 1,200 | |
| South India | Bellary | 75 | 17,300 | – 300 | – 700 |
| Bellary | 77-78 | 18,100 | – 300 | – 800 |
Pellet Sponge Prices as on 12 Feb’15
| Region | Particular | Grade (FeM) | Price | W-o-W | M-o-M |
| North India | Mandi Gobindgarh | 79-80 | 19,800 | – 600 | – 1,400 |
| East India | Durgapur# | 79-80 | 15,800 | – 800 | – 1,400 |
| Central India | Raipur | 79-80 | 16,850 | – 550 | – 1,350 |
| Raigarh# | 79-80 | 15,850 | – 800 | – 1,950 | |
| South India | Hyderabad | 79-80 | 17,500 | + 200 | – 500 |
| Bellary | 75 | 16,000 | 0 | – 900 | |
| Bellary | 77-78 | 16,400 | – 200 | – 900 |
Basic prices in INR/MT
#delivered price
Source: SteelMint Research
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