India: MS Ingot Conversion spread from Sponge Iron increases

MS Ingot conversion spread in Central India widened over MS Ingot shortage and over supply of Sponge iron.

Chhattisgarh: Conversion spread to produce 1 MT MS Ingot from 1 MT Sponge iron increases to INR 9,800-10,000/MT from earlier INR 8,500-9,000/MT, due to following reasons:

1. Power Cut and Limited Production of MS Ingot: MS Ingot production in last week was low owing to power shortage that created low inventory, which led to high price on ready delivery
2. Supply of Sponge Iron increases: Supply of Sponge iron from Rourkela to Raipur has build pressure on Sponge manufacturers in Raipur that stabilizes the prices in the range of INR 21,100-21,700/MT from last one month
3. North & West India Viability increases: Demand of semi finish (MS Ingot/Billet) is decent from neighboring states. It has been heard that buying of U.P, M.H and M.P  is strong in the central India

West Bengal: Demand from local market is stagnant; however buyers of nearby states support Durgapur Ingot/Billet prices. Supply for North India is improved. Manufacturers of MS Billet added that supply to nearby states as well from Nepal have picked up from last one week. We are offering Billet on CST basis at INR 31,700-31,800/MT (Ex-Durgapur).

South India: Hyderabad offers reduced by INR 300-500/MT for Ingot/Billet & Re-bar on account of slow demand in finish long products, as the construction activity got hit. Ingot is being offered at INR 31,700/MT and Billet is traded at INR 32,000/MT. Offers are cheaper by INR 500/MT as compared to yesterday price.

Chennai offers are also fluctuating by INR 300-500/MT from past 1-month. In whole month of Jun’14, Ingot was traded at INR 36,200-36,500/MT and Billet at INR 36,700-37,300/MT (VAT included; ED applicable). Market participants believe that there is limited scopes of major fluctuation at current prices, as coming monsoon will decrease the sales of Long products and reduce the availability of Scrap.