Indian sponge iron prices unlikely to fall sharply

Sponge iron manufacturers believe
that prices may not fall sharply from the current level as the shortage of raw
materials like iron ore and non-coking coal has kept the production level low.

“At present, we are
getting only about 35 per cent of the assured supplies from Coal India,” said
Mr Deependra Kashiva, Executive Director, Sponge Iron Manufacturers Association
(SIMA). With the recent presidential directive to Coal India, Mr Kashiva fears
further diversion of Coal from sponge iron to power producers.

Only a few of the sponge iron makers are able to utilize the captive coal blocks allotted to them. So most of the sponge iron units are forced
to buy coal through e-auctions or import, resulting in higher operating costs and chances are less for prices to fall sharply.

The declining trend in output is likely to continue in the
current year as iron ore availability is still an issue, Mr Kashiva added.