Indian Sponge iron prices may come under pressure on the backdrop of declining Iron ore and coal prices in the domestic and global market. At present, Iron ore prices in the domestic market have corrected by upto INR 1,200/MT (USD 18/MT), Pellet prices by upto INR 1,300/MT (USD 20/MT) and coal prices by upto INR 600/MT (USD 9.5/MT) in last one month.
Current offer for 79/80 FeM C-DRI (Sponge iron) is hovering in the range of INR 18,900-19,500/MT in Raipur, INR 18,000-18,100/MT in Durgapur and INR 17,000-17,100/MT in Rourkela. While, 79/80 FeM P-DRI (Pellet sponge) is being offered at INR 17,200-17,400/MT in Raipur, INR 16,000-16,100/MT in Durgapur and INR 16,400-16,600/MT in Rourkela.
Declining Iron Ore Prices increase Buying Interest from Sponge Manufacturers
Consistent decline in domestic Iron ore prices have increased some buying interest from Sponge manufacturers. Market participants expect Sponge iron production will raise in coming months over lower raw material prices.
“Recent price cut by Serajuddin Mines (Odisha) has brought parity for sponge makers. We expect other miners to reduce prices soon”, said a Sponge iron manufacturer based in West Bengal.
Another manufacturer based in Chhattisgarh, who has recently booked 2 rakes from the miner, mentioned that something to cheer for Sponge manufacturers, who are struggling for quite a long-time.
Falling Scrap Prices in Global Market – A Threat for Indian Sponge Industry
Declining Scrap prices in the global market will definitely not be a good news for Sponge makers. Imported Scrap offers, which have fallen by USD 27-30/MT (INR 16,00-18,000/MT) in last one month, poised a big challenge.
India imports about 5 MnT of Scrap every year, which may move up on the background of declining prices. In a conference organized by Metal Recycling Association of India (MRAI), Shredded scrap offers were reported at USD 290-295/MT, CIF India that were at USD 310-320/MT levels last month.
| Particular | Prices | Monthly Changes |
| Iron ore (5-18 mm; Fe 63%) in Barbil* | INR 4,850/MT | – 1,350 |
| Fe 63% Pellet in Barbil* | INR 5,650/MT | – 1,350 |
| 79-80 FeM Sponge Iron (C-DRI); ex-Raipur | INR 18,900-19,500/MT | – 800 |
| 79-80 FeM Pellet Sponge (P-DRI); ex-Raipur | INR 17,200-17,400/MT | – 800 |
| Imported Scrap (HMS 1&2) | USD 280/MT | – 40 |
* FoR siding prices including royalty
Source: SteelMint Research
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