Sponge makers based in Karnataka, Tamil Nadu and Andhra Pradesh reported that subdued demand from neighboring states has resulted in piling up of inventory levels.
There are about 56 sponge units in south India and currently only 40-50% of units are operational. Alongside, with total sponge production capacity of 6 MnT in the region, about 60-70% of material is being sold to Maharashtra.
However, continuous fall in imported scrap offers and bulk booking by local manufacturers based in Chennai have lowered down sponge production.
“Basically, sponge iron demand is mostly from Hyderabad, Mumbai and Jalna. We don’t sell the material in local region”, said a sponge manufacturer based in Karnataka.
Currently, 78 FeM C-DRI (calibrated lump ore sponge iron) in Bellary is being offered at INR 13,500/MT and 82+ FeM at INR 14,000/MT. Meanwhile, 78 FeM P-DRI (pellet based sponge iron) is offered at INR 12,600/MT in the region.
Highlights
1. Scrap imports to India rose by 15% in Sept’15.
2. Sponge iron export from India to nearby countries like Bangladesh and Sri Lanka fell by 50% in Sept’15 against Aug’15.
3. Central India (Raipur) based manufacturers offered 80 FeM C-DRI at INR 14,400-14,600/MT and the same grade P-DRI at INR 12,700-13,000/MT.
4. Transport charges from Raipur to Jalna are approx INR 1,100/MT and to Mumbai are INR 1,600/MT.
5. A pellet sponge manufacturer in Durg sold 80 FeM P-DRI at INR 12,500/MT (advance payment).
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