Indian Sponge Trade Remains Low

Albeit, Indian sponge market is firm in current scenario, sources reported trade remains low due to anticipated production cut of ingot/billet by central & west India based manufacturers.

During the current month, seasonal low production and scrap shortage have supported Indian sponge iron market and kept offers at firm levels. However, market participants expect that manufacturers may come under pressure as many furnace associations have given indicatons of production cut from 1 Aug’16.

Ingot/Billet makers in Raipur, Rourkela, Mumbai and Jalna are likely to cut production by around 60% from 1 Aug’16. Moreover, market participants in Durgapur also mentioned that few large billet sellers have recently reduced production by 35-40% due to heavy loss at current selling prices. As a result, despite poor demand, billet prices are almost stable in the market.

In discussion with few medium size sponge manufacturers SteelMint assessed that there will no impact on sponge prices if furnace operators will shift production in night hours only or will close for couple of weeks as sponge prices have already bottomed out.

Trade highlights

1. P-DRI offers in Raipur are evaluated at INR 11,200-11,300/MT for quantity over 500 MT and INR 11,300-11,400/MT for below quality. DR CLO of 0-20 mm sold at INR 13,100/MT and lump at INR 13,300-13,400/MT ex-plant.

2. An Odisha based 300 TPD sponge maker (with recovery 85%) offered C-DRI to west coast at INR 12,600-12,800/MT, ex-works. Another manufacturers, who’s metal recovery is approx 80%, offered the material at INR 11,000-11,200/MT ex-works.

3. Sponge offers in Durgapur are firm at INR 11,800-11,900/MT for C-DRI and INR 10,800-10,900/MT for P-DRI. As per manufacturers, trades are taking place at these offers.

4. South (Karnataka) based Sunvik Steel is offering 80 FeM C-DRI at INR 12,400/MT ex-plant. While, Prakash Sponge is offering the same grade material at INR 12,000/MT ex-plant. BMM Ispat (2,300 TPD) has closed its sales due to low availability of sponge.

5. Maharashtra based induction operators prefer purchasing sponge from Chhattisgarh and Odisha instead of Karnataka. While, north based operators majorly buying from Odisha compared to Jharkhand and West Bengal.