Indian sponge iron prices may go up on falling scrap imports, depreciated currency, rising pellet exports and low production in Odisha due to extended monsoon.
With falling ferrous scrap imports to India owing to high prices and depreciated currency, it is likely that sponge iron prices in Indian domestic market might go up. Another major factor which will lend support to sponge prices is restricted supply of iron ore from Odisha as production had been down by 20-25% in the month of October.
Falling Imports of Scrap
Market participants say that because of rising scrap prices in the global market scrap imports to India have fallen down in recent weeks, which was already low 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.
“Current offers for imported scrap (HMS 80:20) are pertaining in the range of USD 345-350/MT CFR India, which is mostly coming from Middle East. There are hardly any deals done from US and Europe, as prices are as high as USD 365-370/MT. Landed cost of imported scrap is higher by almost INR 1500/MT over domestic scrap.” said a scrap trader and importer based in Mumbai.
With falling Rupee and rising scrap prices in global market will make imports not viable for steel millers and importers, he further added.
Iron Ore and Pellet Scenario in India
Another important factor which will support sponge iron prices in domestic market is raising exports of iron pellets, which had been down last month due to monsoons and cyclone that hit Indian east coast.
“Exports of iron pellets from India is heating up after Rupee had slipped to 62-63 levels and global prices have gone up by US$ 3-4 per tonne in last few weeks. Last deal of iron pellets of grade Fe 63.5/63 from India was heard done at around US$ 147/MT FOB east coast (last month it was US$ 142/MT).” said a pellet manufacturer based in eastern region of India.
With increasing export parity in exports of pellets, scope of raising prices is quite possible, he further said.
Iron ore supply from Odisha has also been low due to lower production in the month of October, which will certainly impact sponge iron prices
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