Declining domestic iron ore lumps and imported scrap prices will put pressure on Indian sponge iron prices.
Persistent decline in iron ore prices has surged pressure on Indian sponge makers to reduce their offers. Increase in availability of sponge iron and less viability in pellet sponge have reduced premium between C-DRI and P-DRI.
NMDC, India’s largest iron ore maker, has recently reduced prices for Oct’15 by INR 200-420/MT. Odisha miners in the month of Sept’15 corrected offers by upto INR 800/MT.
Meanwhile, cheaper imported scrap offers is also an indicator for reduction in sponge prices in domestic market. Indian smelters prefer imported scrap over sponge iron amidst healthy recovery in scrap.
Sponge iron (which gives a recovery of 85%) is trading at a premium of about INR 1,000/MT against imported shredded scrap (which gives a recovery of 95%) for October end deliveries.
In a month’s time, Shredded scrap offers to India have reduced by upto USD 30/MT (INR 1,900/MT). While, sponge offers in Raipur, Bellary and Rourkela, which are the major sponge suppliers to west and north regions, have declined marginally by INR 600-1,200/MT.
C-DRI and P-DRI prices as on 6 Oct’15
| Particular | Grade (FeM) | C-DRI | W-o-W | P-DRI | W-o-W | Premium (C-DRI – P-DRI) |
| Ex-Mandi Gobindgarh | 78 +/-1 | 17,300 | 0 | 15,900 | NA | 1,400 |
| Ex-Durgapur# | 78 | 13,700 | -300 | 12,500 | -300 | 1,200 |
| Ex-Rourkela | 78 | 13,500 | -500 | 12,700 | -500 | 800 |
| Ex-Raigarh# | 80 +/-1 | 14,000 | -500 | 12,800 | -200 | 1,200 |
| Ex-Raipur | 80 +/-1 | 14,600 | -500 | 13,050 | -500 | 1,550 |
| Ex-Bellary | 78 +/-1 | 13,500 | -100 | 12,600 | -200 | 900 |
| Ex-Hyderabad | 82+ | 15,500 | NA | 14,000 | 0 | 1,500 |
Prices in INR/MT
Source: SteelMint Research
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