As per SteelMint’s analysis, domestic sponge iron prices are co-related with scrap imports quantity. While, analyzing the scrap imports data since CY16, it was marked that sponge prices are inversely proportional with scrap imports.
For instance, when the scrap imports were higher in the range of 0.5-0.6 MnT during Q1 & Q2 in CY16, then the domestic sponge was traded at INR 11,000-13,000/MT and when in Q3 & Q4 scrap imports declined to 0.2-0.3 MnT, sponge prices rose to INR 14,000-15,000/MT; considering 80 FeM lumps prices for South & East parts of India.
It was also noted that, in the month of Dec’16-Jan’17 there was a significant prices surge in sponge iron was due to sharp hike in coking coal prices which were all time high at USD 310-320/MT CNF India.
In coming months it is expected that scrap imports may increase and as per the reports nearly at 0.45-.50 MnT ; which are 9-10 bulk shipments are expected to arrive at Indian ports in late May’17 or Jun’17.
Hence, there are high anticipations of further price correction of Indian sponge iron in the coming months on the basis of bulk shipments landing to Indian Ports.
Presently, offers for FeM 78-80 sponge C-DRI are assessed at INR 14,500-16,500/MT (USD 225-255) ex-works.While, HMS Scrap offers are at USD 290-300/MT CNF India.
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