Albeit, sponge iron prices have hit rock bottom, buyers are still cautious to take position at current levels of INR 11,500-13,000/MT (78-80 FeM C-DRI) due to declining MS billet prices.
In a week, MS billet prices have fallen by INR 800-1,000/MT and sponge prices by INR 500-800/MT. Market participants expect that there is limited scope of sharp price corrections.
Despite decline in iron ore lump prices, sponge prices may not correct: This week, two Odisha merchant miners had reduced iron ore lump prices by INR 200-300/MT. Other miners are expected to follow suit for November deliveries. In a month, iron ore prices declined by INR 500-600/MT, while, sponge prices by over INR 2,000/MT. Thus, it can be infered that there is no scope of further downfall.
Less availability of pellet sponge will support falling sponge iron prices: Few agents have indicated that sponge iron ore premium is already in downturn movement due to low production of P-DRI compared to increased availability of sponge iron.
SMS (Steel Melting Shop) product cut: Few MS ingot/billet (SMS) manufacturers in Raipur and Durgapur indicated that they are curtailing production in peak hours and others are also planning to follow suit, which will increase further selling pressure on sponge makers.
Current C-DRI and P-DRI Prices with Premium Gap
| Particular | Grade (FeM) | C-DRI | W-o-W | P-DRI | W-o-W | Current Premium | 1-Month Premium |
| Ex-Duragpur | 78 | 13,000 | -800 | 12,000 | -800 | 1,000 | 1,100 |
| Ex-Rourkela | 78 | 11,800 | -700 | 11,000 | NA | 800 | 500 |
| Ex-Raipur | 80 | 13,150 | -650 | 12,000 | -400 | 1,150 | 1,700 |
| Ex-Bellary | 78 | 13,000 | -450 | 12,200 | 0 | 800 | 800 |
Prices in INR/MT
Source: SteelMint Research
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