India: Sponge iron prices continue uptrend in Feb amid escalating raw material prices

Indian domestic sponge iron (PDRI and CDRI) prices have continued to rally in February, as per SteelMint’s assessment.

Notably, prices hit an all-time high on 1 Mar’22 since 2010, the period from which SteelMint has been maintaining its data.

Prices in key markets:

• Raipur: Sponge iron (PDRI and CDRI) prices in this region increased by INR 2,250/t in February.

The monthly average prices of pellet-based sponge iron (PDRI) stood at INR 34,800/t exw and those of iron ore-based sponge iron (CDRI) were assessed at INR 36,730/t exw.

SteelMint recorded around 55,000 tonnes of PDRI deals from Raipur last month.

• Bellary: PDRI prices in February stood at INR 34,010/t, up INR 2,320/t m-o-m. Confirmed deals of around 77,850 t were recorded by SteelMint from the region.

Meanwhile, CDRI prices rose by INR 1,970/t to INR 34,430/t exw. About 50,780 t of deals were recorded last month.

• Rourkela: The average prices of CDRI were recorded at INR 35,800/t exw, an increase of INR 2,160/t compared to last month.

SteelMint recorded deals of around 63,010 t from Rourkela last month.

Key factors attributed to price hike-

Hike in raw material prices

Steelmaking raw material prices saw a significant hike last month owing to various factors like active Chinese buying post-the Lunar New Year holidays and Winter Olympics, supply shortage and the outbreak of the Ukraine-Russia war.

• Iron ore: The spot price of Australian-origin iron ore Fe 62% grade jumped by 10% m-o-m to $142.15/t CFR China in February.

Meanwhile, SteelMint Odisha iron ore fines index also saw rose sharply by 20% m-o-m to INR 5,850/t ex-mines in February.

State-owned miner NMDC has raised iron ore prices by up to INR 680/t for March sales. The hike in prices in Odisha resulted in hike in offers. Post-revision, iron ore fines prices stand at INR 4,560/t, lumps at INR 5,600/t and DRCLO at INR 6,720/t. Prices are on FOR basis, excluding royalty and taxes.

• Coal: Portside prices of South African RB2 (5500 NAR) coal have reached INR 15,990/t exw-Gangavaram last month, higher by INR 3,000/t m-o-m.
• Scrap: SteelMint’s assessment of domestic scrap prices in February stood at INR 38,580/t DAP Mumbai, a rise of 4% m-o-m.

Billet prices at record-high: SteelMint’s billet index touched its all-time high level in February buoyed by higher raw material prices along with limited availability.
The monthly average of SteelMint’s billet index stood at INR 48,890/t exw-Raipur in February, up 8% compared to Jan’22.

Outlook

SteelMint expects an expected upside in raw material prices against the backdrop of the Russia-Ukraine crisis and the bullish semi-finished outlook is likely to keep domestic sponge iron prices higher in the near term.