Indian sponge industry is currently suffering with low conversion gap as conversion spread from iron pellet to pellet sponge (P-DRI) fell below INR 8,000/MT levels; narrowed by INR 1,000/MT M-o-M. This situation happens due to sharp fall in lump prices, which led to continuous decline in sponge iron (C-DRI) prices in domestic market. Whereas, iron pellet offers fell marginally.
In a month, C-DRI prices in Raipur and Durgapur fell by upto INR 2,200/MT due to persistent downfall in iron ore lump prices. While in same period, P-DRI declined by upto INR 900-1,600/MT.
“We require a minimum conversion spread of INR 8,500-9,500/MT to produce 1 MT of P-DRI from 1 MT iron pellet, which is currently narrowed down to INR 7,500/MT. Thus, we have reduced our production”, mentioned a Raipur based large sponge maker.
“Pellet sponge production in Durgapur has reduced sharply due to low profit margins. Thus, many plants have shifted towards iron ore of Odisha mines”, shared a Durgapur based sponge maker, who regularly buy pellet sponge from Odisha.
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