Indian Sponge Iron Prices May Remain Supportive

Sponge Iron (DRI) price looked strong at present level and expected to remain supportive analyzing high prices of scrap and shortage of material.

Currently, 78-80 FeM C-DRI offers are hovering in the range of INR 16,500-18,700/MT (USD 250-285).

SteelMint learned that selling pressure on sponge iron is none amid good demand from smelters due to higher prices of scrap & continuous surge in billet prices. On monthly basis prices has surge for DRI by INR 1,100-2,200/MT (USD 16-34), scrap by INR 1,500-2,200/MT (USD 22-34) whereas billet price up to INR 2,500/MT (USD 40).

Below are the factors which are indicating further strengthening Indian sponge iron prices in near term:

Low inventory levels: Most of the manufacturers in Central, East India & South India have reported inventory level has lower down in sponge & billet as well. It seems that, similar situation will occurs in days to come as scrap shortage prevails in the major scrap consuming regions & rebar demand quite good domestically.

Strong raw material prices: The miners for Mar’17 have spike Iron ore prices up to INR 700/MT; similarly, pellet prices also on higher side following the strong prices of key fuel imported from South African coal which offers are currently at USD 74-75/MT CFR India. According to the sources there is limited stock of coal for exports in the South Africa which affects the supply in Indian market. Also there is anticipation for further price surge for Indian Iron ore.

Higher prices of substitute products: At present, prices of both substitute products like scrap & pig iron are in increasing mode. Pig iron prices are rising due to increase demand in the domestic & global market. While, scrap prices rising due to higher prices of imported scrap which makes domestic scrap demand healthy. Imported Scrap offers for containerized HMS 80:20 are prevailing at USD 300-310/MT CNF India.

Domestic sponge offers as on 22 Mar’17

Prices in INR/MT
Source: SteelMint Research