Indian sponge iron prices have been volatile in last few days but participants expect prices to find support at these levels.
Current offers for Pellet sponge (P-DRI) is about INR 16,300-16,500/MT ex-Raipur, INR 17,100-17,300/MT ex-Durgapur and INR 16,200-16,400/MT ex- Bellary for 78-80 FeM grade.
The reasons sited by participants are-
Limited supply and rising prices of Coal and Iron Ore: The sponge iron manufacturers reported that availability of Coal & Iron ore is less with them. They claim, railways are giving priority to power sector which has reduced supply of empty wagons for non- power sector.
According to railway movement data maintained by SteelMint stats, Iron ore supply through rake has declined about 18% in the month of Sept’17. The data showed, total 936 iron ore rakes movement during Sept’17 as compared to 1,142 rakes in Aug’17.
Higher Scrap Prices: Scrap & Pig iron, which are the key substitutes of sponge iron, the prices of these alternate products continue to move up over healthy bookings.
In a week duration, domestic pig iron prices surge by INR 300-1,000/MT (USD 5-15). Similarly, the melting scrap offers in local market also rose near to INR 500-700/MT supported higher imported offers.
Falling Scrap imports: Indian steel mills hold purchase of imported scrap due to higher offers than the available scrap in local market which indirectly increases sponge iron consumption by induction furnaces.
In the latest data released by Indian customs, it is noted that India imported 0.39 MnT ferrous scrap in Aug’17, witnessed fall by 25% M-o-M against 0.52 MnT in Jul’17. Further, in the first 8 month’s of CY17 (Jan-Aug) ferrous scrap imports recorded at 3.15 MnT which was summed at 4.02 MnT in corresponding period last year, fall by 22% Y-o-Y.
Rising Semis exports: Indian origin Sponge & billet in more demand in the global markets due to absence of Chinese billets & higher prices of scrap. Indian bulk billet exports moved up by 4.68% in Oct’17 to 132,220 MT against 126,300 MT in Sep’17.
It seems that exports of billet to cross 2 MnT in current calender as export inquiries continue to be strong and the large steel makers are frequently floating export tenders for semis products. In 2017 till Oct-end, the total billet exports stood at around 1.90 million tonnes against 1.75 MnT in CY 2016.
In line sponge exports, it is noted that India’s sponge iron exports increase 50% in first 8 month’s of CY 2017. The nation has exported about 300,000 MT Sponge iron during Jan-Aug’17 against same preceding CY 2016 at 200,000 MT.
Domestic Sponge Iron prices as on 10th November 2017
| Particular/Delivery | Size, Grade, Origin | Prices | Min | Max | Change | 1W | 1M | |
| C-DRI | Ex-Durgapur | Mix, FeM 78%, +/-1 | 18,000 | 17,900 | 18,100 | 0 | 18,200 | 16,950 |
| Ex-Rourkela | Mix, FeM 80%, +/-1 | 17,100 | 17,000 | 17,200 | 0 | 17,200 | 15,700 | |
| Ex-Raipur | Mix, FeM 80%, +/-1 | 17,600 | 17,500 | 17,700 | 0 | 18,200 | 16,300 | |
| Ex-Bellary | Lumps, FeM 80%, +/-1 | 16,500 | 16,400 | 16,600 | – 250 | 17,400 | 16,400 | |
| Ex-Hyderabad | Lumps, FeM 80%, +/-1 | 17,200 | 17,100 | 17,300 | – 100 | 17,800 | 16,600 | |
| P-DRI | Ex-Durgapur | Lumps, FeM 78%, +/-1 | 17,200 | 17,100 | 17,300 | 0 | 17,300 | 16,150 |
| Ex-Jharsugda | Lumps, FeM 78%, +/-1 | 15,800 | 15,700 | 15,900 | 0 | NA | NA | |
| Ex-Raipur | Lumps, FeM 80%, +/-1 | 16,400 | 16,300 | 16,500 | + 200 | 16,700 | 14,800 | |
| Ex-Bellary | Lumps, FeM 80%, +/-1 | 16,300 | 16,200 | 16,400 | – 200 | 17,100 | 16,250 | |
| Ex-Hyderabad | Lumps, FeM 80%, +/-1 | 17,200 | 17,100 | 17,300 | – 100 | 17,600 | 16,700 |
Basic prices in INR/MT & excluding of GST @ 18%
Source: SteelMint Research
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