Reduction in prices of Iron ore by Major miners and high production of Pellet has pressurized sponge offers, although manufacturers are reluctant to cut the offers looking towards demand from West and North India. Market participants believe in coming days price may correct by INR 500-700/MT looking thin trade volume and rising pressure in finish sales.
Trade volume of Semi finish across the country remains standstill as buyers remain cautious and buy material hand to mouth. Prices this week have remain range bound within INR +/- 300/MT. On the other side, marginal improvement has been witnessed in the country’s southern part (Hyderabad & Bangalore) owing to continuous power cut for every week by 1-2 days in a month’s time. Power Cut has hit the Production of Ingot/Billet & finished steel Products in the region. However, shortage of Scrap has remained in the North and Western region.
Market Players anticipate Prices may fall by INR 500-700/MT owing to following reasons:
- Fall in Iron ore prices by INR 500/MT will pull down Sponge Iron cost by INR 700/MT
- Fall in Pellet price by INR 200-300/MT will bring down cost of Sponge Pellet by INR 400/MT
- Increasing Pellet production in Odisha and C.G will upsurge the sponge pellet production extending Sponge pellet and Sponge Iron gap further. (Current gap is INR 1500/MT)
- Imported Scrap is currently feasible for Indian importers due to appreciation of Indian currency. Current offers for HMS I & II is at around USD 375/MT (INR 22,500/MT) landed at CFR Mumbai port.
- Demand for Re-bar & Structural steel is expected to remain sluggish in coming days owing to Lok Sabha elections which are scheduled from 7thApr to 12thMay, 2014. Market participants also expect that capital transactions will be less in the period impacting Sales of semi finish & finished steel.
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