Indian Sponge Iron Prices correct Marginally W-o-W

• Indian sponge iron prices correct marginally W-o-W
• Indian Scrap importers see imports increasing on Rupee appreciation
• 'Busy season charge' will increase sponge iron cost of production by INR 150-200/MT

Indian sponge iron prices trade marginally lower as compared to last week. Market traders highlight that with rupee finding strength against US dollar, imports of Scrap is expected to go up in coming weeks, which might put some pressure on sponge iron prices.

Current prices at Chhattisgarh, India's largest sponge producing state, stands at around INR 20,100-20,300/MT (Ex Raipur) and INR 19,800-20,000/MT (Ex Raigarh). Sponge iron in Odisha being offered at INR 18,700-18,800/MT and West Bengal at around INR 19,300-19,500/MT.

Sponge manufacturers mention that overall cost of production will go up by INR 150-200/MT after 'busy season charge' by Indian railways under dynamic pricing policy ,gets effective from 1st October'13. However participants believe that this marginal hike will not increase prices to a great extent. 

Sponge iron prices which were trading at a low of almost 2 years last month had shown significant jump, after Rupee crashed to 69 levels.

India is the largest producer of sponge iron in the world with an installed capacity of over 35 MnT pa, however with several restriction implied on mining, sponge iron production has been hit hard. According to sponge iron manufacturer's association, production in FY'13 stands at around 18-19 MnT.