In October 2022, the conversion spread from sponge iron (PDRI) to billets increased in Raipur and Durgapur by 4% and 1%, respectively. In contrast, the conversion spread had increased by 2% and 8%, respectively, in both markets in September.
According to SteelMint data, the average monthly conversion spread in Raipur and Durgapur from sponge P-DRI (pellet-based DRI) to billets in October was roughly INR 15,974/t and INR 15,915/t, respectively.
On 2 November, the conversion rate was determined at INR 14,700/t in Raipur, and INR 15,950/t in Durgapur.
Why are margins rising?
Domestic sponge iron prices dipped in October while billet prices remained stable. Steel prices declined in October, which put pressure on market participants. The market had trouble settling down because of weak demand for finished steel.
Furthermore, October saw low demand due to the festive holidays, which impacted trading activity. Throughout the month there was downward pressure on sponge iron prices in both markets.
As a result, a significant drop in sponge iron prices relative to billets aided in the conversion hike enjoyed by the billet producers. With modest demand for finished steel in the domestic market, billet demand remained relatively low key.
Price overview
- In Raipur and Durgapur, the monthly average price of billets fell marginally by INR 100-350/t in October.
- On the other hand, during October both the markets reported a considerable decrease in monthly average sponge iron prices in the range of INR 500-700/t.
Outlook
In November, the conversion spread of billet makers is likely to change slightly.
Leave a Reply