Indian sponge iron (DRI) exports have come down owing to higher prices in domestic market and volatility in seaborne scrap prices. Sponge iron prices have increased sharply by INR 500-1,000/MT in a period of a month, where as scrap prices have been volatile.
India is the largest producer of DRI in the world. Country produces over 23 MnT of DRI
annually and exports around 0.30 MnT in CY 16 (Jan’16-Dec’16). Usually out of total exported Indian DRI, around 90-95% is procured by Bangladesh. However, due to cheaper scrap offers, the smelters in Bangladesh largely import Scrap, instead of DRI.
Presently Indian DRI export offers are at USD 310-320/MT for lumps, phosphorus below 0.5% and bag packing on CPT Benapole port, Bangladesh. While, HMS Scrap offers for the country are at USD 310-315/MT, CNF Chittagong, Bangladesh.
“Sponge iron trade is very limited at the moment. Very few trades have been reported in the range of USD 310-320/MT CPT Benapole (Bangladesh). Buyers are more inclined towards scrap over sponge iron. Also domestic steel demand is not very encouraging”, said a trader based in Dhaka.
To reduce input cost and better yield, scrap imports are preferable with the Bangladesh based steel manufacturers, also the reason for the limited purchases of DRI or Scrap by smelters in Bangladesh is that there is a low rebar demand in the country.
It should be noted that the SAFTA agreement also have been extended by Bangladeshi government, which had expire on 31st Dec’16, under this agreement Import duties on DRI & Ingot are almost nil, however on billet imports duties are applicable by USD 150/MT.
Currently, the Bangladesh has steel capacity of about 3.0 to 3.5 MnT which is likely to increase in the coming years as the Bangladesh government has plans to ramp up steel production rapidly.
Leave a Reply