With Indian steel demand continued to remain under pressure, sponge iron prices in spot market have corrected up to Rs 900/MT ($14/MT) in last one week. India is the largest sponge iron manufacturer in the world with an annual production of around 20 million tonnes against an installed capacity of over 40 million tonnes.
Market participants highlight that fall in sponge iron prices are more related to up coming elections in several states, which have slowed down government's spending on infrastructure projects.
Sponge iron industry have been under pressure owing to high iron ore and coal prices, after Indian government set several rules in order to curb illegal mining in the country.
Some also mention that rising sand prices in several places have hampered construction activities, which have led to poor demand for finish steel and other steel products related to it.
A senior official at Chattisgarh Steel Association confirmed that almost 20 small induction units based in state have withdrawn their agreement with state electricity board looking at weakening market condition and extreme margin pressure.
Iron Ore and Pellet Prices:
With falling sponge iron prices in Indian market, iron ore and pellet prices in domestic market are under pressure as well. Market participants expect there is scope of correction in pellet prices in domestic market, how ever iron ore prices will not see much impact as production had been low during monsoon season.
Sponge Iron Prices
| Indian Sponge Iron prices (in INR/MT) as on date 28-Oct-2013
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| Rourkela | 78-80 FeM | 18,050 | – 250 | – 500 | – 650 | ||
| Durgapur | 78-80 FeM | 20,000 | 0 | – 400 | + 700 | ||
| Raipur | 80 FeM | 19,800 | – 100 | – 900 | – 500 | ||
| Raigarh | 79-80 FeM | 19,500 | – 100 | – 600 | – 350 | ||
| Bellary | 75 FeM | 18,300 | – 200 | – 700 | – 900 | ||
Daily Assessment
Excise duty @12.36%; VAT as applicable.
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