Billet Manufacturers Conversion Spread Continues to Remain Thin in spite of Rising Prices

India billet prices increased by INR 1,200-1,500/MT within last 10 days, However, conversion spread from Sponge Iron remains the same.

Indian billet manufacturers conversion spread in Raipur & Durgapur from Sponge P-DRI grade are hovering at around INR 8,100-8,500/MT similar to last few months. As per market participants, minimum cost to conversion is INR 9,000-10,000/MT. It is to be noted that the electricity prices in Chhattisgarh Industrial area, Raipur have reduced approx by INR 1.00/unit in the month of Aug’16.

Manufacturers quoted that despite increase in billet prices, the conversion spread remains the same which affects profit margins. Prices of key raw materials like sponge iron, pig iron & silico manganese are on high side in proportion to increase in billet prices.

On M-o-M, increase offers are as follow- billet by INR 1,200-1,500/MT, sponge (C-DRI) by INR 1,500-2,000/MT, pig iron by INR 1,800-3,500/MT and silico manganese by INR 1,500-2,000/MT in central & east India.

Today billet offers reached to INR 21,500/MT ex-Raipur, INR 21,000/MT ex-Durgapur, INR 20,800/MT ex-Rourkela, INR 23,100/MT ex-Mumbai, INR 23,000/MT ex-Hyderabad and INR 23,500/MT ex-Chennai.