What do Experts Think on Indian Sponge Iron Market?

On going power crisis, rising input cost and dipping productions all these factors have weighed upon Indian sponge iron industry from last few months. SteelMint has spoken to around 50 top people in the country on sponge iron market and has come out with following report.

Currently sponge industry is under going a consolidation mode, where expensive input cost, irregular supply of raw material like iron ore and rising power prices in the country has made situation bad for the industry.

CENTRAL

As per conversation with one of the top official at Tata sponge, prices have gone down by Rs 1,000-15,00/t in last one month on power crisis in major states like Punjab, UP, Bengal, Assam, Tamil Nadu and AP.Prices are around RS 21,700/t (Sponge Iron, 82FeM, Ex- Tatanagar)

As per official from Monnet Ispat, sponge prices have over corrected and usually prices stay firm during monsoons as production goes down, but this time is has gone the other way round. Current prices are around Rs 21,200/t (Pellet Sponge, 80 FeM, Ex- Raigarh)

WEST

Sponge iron industry also going a bad phase in Goa and Maharastra on raw material crisis and falling steel prices.Prices have corrected over Rs 1,200/t compared to last month reported a sponge manufacturer based in Goa.

Most of sponge units are shut or running at low capacity o unavailability of iron ore.Prices are around Rs 20,600/t (Pellet Sponge, 78 FeM, Ex- Goa)

SOUTH

According to sponge manufacturers in South, prices have corrected by Rs 1,000-1,200/t in last few weeks on power crisis in states like Tamil Nadu, Goa and AP. Sine iron ore is not available in quantity, most of sponge plants are running on pellets (which is offered at Rs 8,400-8,600/t , Ex-Bellary).

Though industry is hopeful some mines will get approval by next month but sales will happen through NMDC (through E-auction).

According to Industry experts only big plants like Jindal will get benfited from this move.

Current prices are around Rs 19,700/t (Pellet Sponge, 78 FeM, Ex-Bellary) and Rs 19,400-500/t  (Pellet Sponge, 75 FeM, Ex-Bellary) and Rs 20,500/t  (Sponge Iron, 75 FeM, Ex-Bellary).

Conclusion:

Sponge prices will remain under pressure till power situation improves in major steel producing states. With lesser imports of scrap (on weak Rupee), sponge iron will not lose its shine. Every small demand will make prices go high.

Only risk is current power crisis and sluggish demand for finished steel during monsoons as construction activity slows down.