Prevalence of weak domestic and global market sentiments and prolonged subdued demand have been ruling Indian secondary steel prices since past couple of months. Presently, Indian sponge makers are reluctant to cut prices further, viewing at continuous fall in prices throughout the value chain of steel making. Market participants reported that sponge makers are currently bearing a loss of INR 800-1,500/MT.
In a week, MS billet prices have declined sharply by INR 500-1,100/MT, but sponge iron market has witnessed a marginally downfall of INR 300-750/MT.
Several sponge makers have curtail their production this month, viewing at limited conversion spread and persistent fall in prices. Similarly, pellet manufacturers are also running their plants at 30-40% capacity utilization on the backdrop of low realization in pellet due to continuous fall in iron ore lump prices and unchanged fines prices from a quite long time.
A pellet manufacturer in Raipur, having plant capacity of 1.2 MnT pa reported, “We will keep production on hold from 20 Oct’15-10 Nov’15. After resumption, we will only run plants, as per our requirement and not to sale in merchant market due to heavy losses.”
Monthly average iron ore lump and sponge prices
| Particulars | Aug’15 | Sept’15 | Oct’15 |
| NMDC iron ore | 2,950 | 2,850 | 2,500 |
| Rungta mines iron ore (Odisha) | 4,750 | 3,300 | 3,100 |
| Serajuddin mines iron ore (Odisha) | 3,800 | 3,031 | 2,850 |
| C-DRI price (80 FeM; ex-Raipur) | 15,450 | 15,850 | 14,000 |
| C-DRI price (78 FeM; ex-Durgapur) | 14,800 | 15,100 | 13,550 |
| MS billet (ex-Raipur) | 22,900 | 23,700 | 21,700 |
| MS billet (ex-Durgapur) | 22,550 | 23,650 | 21,700 |
Prices in INR/MT
Source: SteelMint Research
Trade-wise
1. Pellet sponge production fell further this week; only 2-3 sponge manufacturers are heard to offer material in central India.
2. NMDC increased fines prices by INR 100/MT but reduced lump prices marginally by INR 80-120/MT.
3. DR CLO production may hit this month as CG based sponge manufacturers are opposing NMDC’s prices and may not book material.
4. Sponge iron production may remain low till Dec’15.
5. Central Indian DR CLO offers are in the range of INR 13,500-13,900/MT, ex-works.
6. Durgapur based sponge makers are offering 78 FeM at INR 12,500/MT, ex-works.
7. Prakash Sponge is offering 78 FeM C-DRI lump at INR 13,000/MT, ex-works (Karnataka).
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