Material been sold at around 8% higher than the floor prices. Maharashtra based steelmakers started sourcing sponge iron from Karnataka based sponge units.
In a recent Karnataka e-auction conducted on 13 Apr’16, southern based sponge units aggressively participated in auction to procure iron ore. The sponge makers procured high grade ore from e-auctions. Material had been sold at higher bid prices by upto 8% from the floor prices.
Let’s see, what all factors contributed to increase in purchases of iron ore:
NMDC price hike
Recently, NMDC has hiked iron ore prices for Apr’16 deliveries. Prices had been incremented by INR 140-270/MT. Currently, the miner is selling CLO of Fe 65% at INR 2,176/MT from NMDC Donimalai mines in Karnataka e-auctions. So, in line with NMDC price hike, private miners also incremented iron ore prices for Apr’16 inorder to make their ore more competitive.
Imported ore become unviable
Secondly, upon sudden increase of global iron ore prices by USD 5-7/MT in a week time, steelmakers resist themselves purchasing imported ore. Currently, global iron ore prices for Fe 62% Australian fines are hovering at USD 60/MT, CFR China. In-line, current offers for imported South African lump (which is mainly imported in India) are assessed in the range of USD 68-70/MT, CFR Kandla. Due to higher imported offers, steelmakers prefer domestic ore over imported.
Indian scrap importers hesitant to purchase imported scrap over sufficient availability of sponge iron
In Maharashtra, due to rising global scrap offers, Indian scrap importers hesitant to purchase imported scrap. Sufficient availability of sponge iron at much cheaper rate compared to imported scrap had driven Indian scrap importers to switch towards sponge iron.
Karnataka based sponge iron ore manufacturers are aggressively purchasing raw material from Karnataka e-auctions at higher prices as Maharashtra based steelmakers started sourcing sponge iron from Southern based sponge manufacturers.
Leave a Reply