SteelMint learned that, most of standalone sponge iron plants in Odisha, eastern India have curtailed production. Also similar situation persist in Raipur, central India market where mills are holding fresh raw material bookings.
As per Odisha based participants, couple of major merchant sponge producers in Odisha who have capacity of 500-1,000 TPD, recent have reduced production by 30-50% with shut few kilns.
Similarly in Raipur, where the most of sponge iron plants who don’t have facility to make other products are curtailing production as they holding back fresh bookings of raw materials i.e. iron ore & pellet due to loss making situation. Also limited supply of pellets have tightened offers in merchant market, thus this has forced sponge plants to put plants on regular maintenance to match supply-demand chain.
As per industry experts, the Sponge P-DRI prices should be not less than of INR 18,000/MT, however currently they are offered at near to INR 16,800-17,000/MT ex-Raipur.
The sponge iron plants in Raipur & Odisha contributes about 30-40% in India’s total sponge iron production. Hence there are assumptions that domestic sponge iron market to find support despite weakening Billet & Rebar prices in major locations.
In line with other major markets, the standalone plants in Durgapur & Bellary are not in mood to cut prices due to seasonal low productivity and primarily eyeing to complete dispatches of previous bookings.
As per assessment made by SteelMint, even though there was sharp drop in Billet prices, the sponge producers have marginally changed their offers and the latest deals have been reported on sustained price range which are reported at INR 16,400-16,600/MT ex-Rourkela, INR 17,000-17,200/MT ex-Raigarh, INR 17,300-17,500/MT in Durgapur & INR 16,400-16,600/MT ex-Bellary, excluding 18% GST.
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