Indian sponge prices have remained firm with marginal corrections in central India. However, pressure on manufacturers increase due to negative sentiments in MS billet market.
Looking at current scenario, market participants expect prices are likely to remain under pressure due to low conversion spread from P-DRI to MS billet. Currently, sponge iron (C-DRI) prices are hovering in the range of INR 12,500-14,500/MT and P-DRI prices at INR 12,500-13,000/MT.
MS billet makers based in Raipur shared, “We are unable to produce billet at a price gap of INR 9,200/MT from P-DRI. So, we are awaiting for further price corrections in order to take position.”
Few sponge agents have also reported that they are continuously receiving inquiries from sellers (sponge makers), but didn’t receiving any response from buyers (ingot/billet makers).
Presently, trade volume is thin and sponge production has increased, which is building selling pressure on sponge makers. Meanwhile, sponge makers reported that at present cost of iron ore, it will be difficult for manufacturers to reduce price further.
Trade highlights
1. Rourkela (Odisha) based manufacturers are offering 80 FeM C-DRI at INR 13,000/MT, ex-works.
2. 80 FeM P-DRI is offered in Raipur at INR 12,500-12,600/MT ex-works.
3. Durgapur market is almost closed due to ongoing festive season. Trade activities will take place from Monday onwards i.e. 26 Oct’15.
4. South based manufacturers (Bellary) have reduced P-DRI offers by INR 200/MT. While, they have kept C-DRI offers unchanged for last 10 days.
Pellet sponge and billet with conversion gap
| Particular | P-DRI (FeM) | Billet (125*125) | Conversion Gap | 1-Week Earlier Conversion Gap |
| Raipur ex-works | 12,500 (80) | 21,700 | 9,200 | 9,250 |
| Durgapur FOR | 12,700 (78) | 21,700 | 9,000 | 9,100 |
| Rourkela ex-works | 12,000 (78) | 21,000 | 9,000 | 9,300 |
| Hyderabad ex-works | 13,500 (80) | 23,000 | 9,500 | 9,200 |
Prices in INR/MT
Source: SteelMint Research
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