Indian sponge iron prices have increased sharply reaching its 2 month-high since mid-Aug in central & southern regions. The fresh offers for sponge P-DRI are at INR 21,400/t exw Raipur & INR 20,400/t exw Bellary, as per data maintained by SteelMint.
The key factors in rising sponge prices are:
- Increasing raw material prices: NMDC has increased raw material prices by 6-7% for Oct’20. NMDC Karnataka has also raised pellet offers by INR 400/t against its last offers in early Oct’20. Further, there is a hike in Raipur & Bellary pellet offers by INR 500-700/t, w-o-w, due to supply shortage on scheduled maintenance shutdown by a couple of major producers.
- Falling merchant supply of sponge iron: Few major producers in Raipur have either reduced sponge supply in the spot market on lower productions or have increased their own consumption. This has led to supply shortage & a surge in spot prices.
- Rising substitute products’ price: Imported scrap prices in India have climbed to a one-month high with a hike of $8/t, w-o-w, following which domestic suppliers have also tightened their offers. Also, strengthening pig iron prices in central & eastern India is a major factor behind rising sponge iron prices.
- Logistical bottlenecks: Mostly rakes are getting diverted to meet the coal requirement of thermal power producers, there are not enough rakes to dispatch iron ore.
Leave a Reply