Indian domestic sponge makers may curtail production to meet demand-supply chain. High production cost, cheaper selling price and increasing inventory are combinedly pressurizing manufacturers to lower their production.
India’s central, east and south based P-DRI makers reported that they are unable to get production cost on current trade price due to high pellet and coal prices.
Input cost scenario
In a month, P-DRI prices in domestic market down by INR 500-1,500/MT, while, pellet prices fell only by upto INR 500/MT. Market participants reported P-DRI makers usually require price gap (conversion spread) of around INR 8,000/MT between Pellet and P-DRI, which is now at INR 6,500/MT in central and east India.
In addition, South African RB2 (5500 NAR) coal, preferred by Sponge utilities up by INR 200/MT (USD 3/MT) in a month, also witnessed a sharp rise by INR 350-400/MT (USD 5-6/MT) in a quarter. Current offers are prevailing at the range of USD 51-52/MT, CNF India for Jun’16 loading.
Buyers report
North based bulk sponge purchasers reported that sellers are now offering credit purchase to book sales, which were earlier advance payed. Moreover, sponge manufacturers are pushing to expedite material lifting due to high stock at plants.
Price comparison of P-DRI and pellet
|
Particulars |
Size | Prices | W-o-W | M-o-M | Q-o-Q |
| Ex-Raipur | 100L, 80 +/-1 FeM | 10,800 | – 250 | – 750 | – 1,750 |
| 6-20 mm, 63 | 4,150 | 0 | – 300 | – 50 | |
| Ex-Durgapur | 100L, 78 +/-1 FeM | 10,000 | – 300 | – 1,300 | – 2,100 |
| 6-20 mm, 63 | 3,600 | 0 | 0 | – 250 | |
|
Ex-Bellary |
100L, 78 +/-1 FeM | 11,200 | – 250 | – 500 | + 200 |
| 6-20 mm, 63 | 4,350 | – 150 | – 50 | + 150 |
Prices as on 13th May’16 in INR/MT; ED and CST/VAT extra
Source: SteelMint Research
Leave a Reply