Indian Sponge Iron finds Support on Rising Global Scrap Prices

Indian sponge iron (DRI) prices finds support on limited supply of iron ore and rising price difference between domestic and imported scrap.

With rising ferrous scrap offers from US, Europe and Middle East suppliers, Indian sponge manufacturers have preferred to keep their offers firm despite moderate demand in domestic market. Current sponge iron offers are hovering in the range of INR 18,000-20,000/MT (US$ 295-325) on ex-woks basis.

Market participants highlight that rising scrap prices in global market, Indian imports of scrap to fall further in coming weeks, which is already down by 30-35% over previous year. Indian scrap imports which had hit an all time high of 7.5 MnT in 2012-2013 have seen a drastic fall over depreciated currency and recent duty of 2.5% imposed on imports of scrap.

Strong buying from Turkey, which is eventually the largest importer of scrap in the world, have made scrap rise shoot up by USD 10-15/MT in last few weeks and expected to move up further.

“Strong demand from Turkey, global scrap prices had to go up. Currently offers from European and US suppliers are much higher than last month. With weak Rupee, it is not viable for us to import. However some cargoes are still coming from Middle East at USD 345/MT CFR India levels, but offers are expected to go up soon.” said a ferrous scrap importer based in Mumbai, India.

Not many importers are keen to import at the moment as landed cost of domestic scrap is much cheaper than landed cost of imported one, he further added.

All prices are basic and delivered to plant basis

On the other hand Indian sponge iron (DRI) manufacturers mention that despite sluggish demand of finish steel in Indian market, sponge prices are quite stable and will remain so in coming weeks.

“Sponge iron prices are firm since last few weeks and there are no signs of any correction till now. Two major reasons that will support iron ore prices are: First, supply of iron ore has been less from Odisha as production was down during October due to extended monsoons and heavy rain falls and second rising imported scrap prices in global market, which will certainly restrict imports of scrap.” said Mr G. Agrawal, a sponge iron manufacturer based in Eastern region of India.