Indian Sponge Iron Prices to Remain Supported Amid Raw Material Shortage – Reports

Indian sponge iron prices are currently trending close to 10 years high. However as the prices surged to sky high in just few days few smelters fear regarding sustainability of such high price levels.

SteelMint spoke with several industry experts and analysed that the prices have less scope to fall significantly and the factors that will keep prices supported are mentioned below.

Shortage of raw materials: Amid monsoons, there is shortage of key fuels with the sponge iron makers for Coal. Also Iron ore & Pellet production and dispatches are hampered due to logistic issues which may keep supply tight in coming days.

The large share of standalone sponge makers based in Odisha, Durgapur, Raipur & Bellary stated limited stock of iron ore & pellets, hence are not looking for bulk bookings.

Higher pellet prices: As the handling cost is cheaper for pellets, major manufacturers refer to make P-DRI rather than to C-DRI specifically in Raipur, Durgapur & Bellary. In a month’s duration the prices of iron pellets in domestic market jumped near about INR 1,000-2,000/MT (USD 14-29).

Hence, with further hike in prices of pellets the cost of production has increased with the producers and also as the production utilization is low seasonally, making an advantage with them to further raise prices.

Also Odisha based merchant miners have announced a 2nd hike in iron ore prices by INR 300-400/MT in a week’s time which may keep prices supported.

Healthy bookings of pellet & sponge: Integrated plants reported that currently they had hefty bookings for iron pellets & sponge. The producers in Raipur, Durgapur & Odisha have booked bulk export orders of pellets. Further sponge iron bookings being stated healthy, hence prices may increase.

Supply-demand mismatch: In general during the monsoon season induction operations are for limited hours, however in current year the production levels of Ingot/Billet stands healthy, resulting high consumption of sponge iron. Although the sponge iron productions are low resulting less supply & high demand for sponge iron.