- Buyers remained cautious amid weak demand and volatile raw material costs.
- Higher pellet prices continued to squeeze sponge iron producers’ operating margins.
The sponge iron market witnessed a softer trading trend today, with mixed price movements across regions due to supply-demand imbalances. The Central region recorded price gains, the Eastern region remained under pressure, while the Southern region continued to trade on a stable note. Overall market activity stayed slow, with most buyers preferring need-based purchases amid cautious sentiment.
In the Central region, sponge iron prices increased by INR 100-200/tonne, mainly due to a shortage of raw pellets. Rising pellet prices and the completion of previously booked volumes encouraged manufacturers to quote higher offers. The improvement in raw material costs supported market sentiment, although actual trading activity remained moderate as buyers continued to purchase only for immediate requirements.
The Eastern region witnessed a price decline of INR 100-300/tonne due to weak demand. While market enquiries were reasonably good, buyers remained active only at lower price levels, resulting in very few enquiries converting into actual deals. Additionally, several kilns remained under maintenance because of lower operating margins, limiting production, while overall trading activity stayed restricted to need-based transactions.
In the Southern region, prices remained largely stable. Producers avoided offering significant discounts because of continued margin pressure, while buyers also restricted purchases to immediate requirements. The availability of material from other regions continued to keep the market well supplied, resulting in limited price movement and slow trading activity.
Raw material
In the raw material segment, higher pellet prices provided support to sponge iron prices, particularly in the Central region. The DAP-Raipur pellet index increased by INR 300/t to around INR 9,850/t, mainly due to supply disruptions caused by maintenance shutdowns at several major pellet plants. Meanwhile, non-coking coal prices continued to trend lower, offering some relief to sponge iron producers. However, the benefit from softer coal prices was largely offset by the sharp rise in pellet prices, keeping overall production margins under pressure.
Trade activity
Overall, trade activity remained slow and largely need-based, with no major bulk transactions reported in the market. Around 10,000 t of pellet-based sponge iron deals were recorded today, nearly 9,000 t lower than the previous day, reflecting cautious buying sentiment. Market participants are expected to closely monitor raw material availability and demand trends for further price direction.
Rationale
Prices have been derived based on transactions, offers, bids, and indicative price data sets. Transactions are considered as T1 and given a weightage of 50%, whereas other data sets are considered as T2 and given a weightage of the balance 50%.
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