Sponge prices might have gone up for various factors like expensive raw material, low production, high steel prices and expensive imports of coal and scrap.
But experts feel that sponge iron prices may not sustain in the near term for factors like
1. Strong Rupee
Rupee has started recovering against dollar, which has made imports of scrap cheaper by 7-8 %. It is reported that quite a lot of deals have been concluded last week by Indian scrap importers.
It is expected that imported scrap will start arriving in India after 15 days which will keep sponge iron prices under pressure, say market traders.
2. Weak Demand
Steel prices gained Rs 2,000-2,500 in last few weeks on improved demand and expensive raw material, but market participants say that demand has reduced by 15-20 % recently from construction and auto industries, which will make steel prices under pressure.
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