Sponge Makers in Central India Witnessing Limited Demand

The major sponge producers in Central region – Raipur & Raigarh are witnessing dull demand due to closed furnaces in Raigarh for more than a week.

In Raigarh, Central India there are about 25-30 Induction furnaces which produced approximately of 2,500-3,000 MT Ingot/Billets every day and thus with closure of these units, local sponge consumption fell more than 4,000-4,500 MT/day; resulting selling pressure with the standalone sponge producers.

As per trade participants, the local sponge producers in Raipur are unable to attract buyers as offers are cheaper by around INR 200-300/MT from Raigarh on FoR basis. The Raigarh based sponge manufacturers are totally sold out in Raipur as local inquiries are limited due to closed furnaces.

On 19th June, small lots of Raigarh Sponge P-DRI reported at INR 19,700-19,900/MT FoR Raipur, however local sponge producers in Raipur were offered same grade material at INR 20,000/MT ex-plant.

As per assessment, presently the sponge prices in Raigarh are cheaper by INR 800-1,000/MT than the prevailing offers in Raipur and freight charges from Raigarh to Raipur is at about INR 500-600/MT. Hence landed cost of Raigarh sponge is cheaper than the offers by Raipur based local sponge producers.

Today’s latest offers for Sponge P-DRI hovering at INR 19,000-19,100/MT ex-Raigarh & INR 19,900-20,000/MT ex-Raipur. Sponge DR CLO grade offers in Raipur remain down trend over poor inquiries and offered at INR 22,500-22,700/MT as against last week average at around INR 22,800-23,000/MT ex-plant.

Chhattisgarh (Central region), is the 2nd largest sponge producer in India after Odisha (East India). The Chhattisgarh state has installed capacity of sponge iron about 9 MnT in which production during Financial year 2017 recorded at 7.63 MnT, as per data maintained by SteelMint.

The producers in Central India are largely sell sponge in local market and about 20-30% in Western (Maharashtra) & North India (Punjab).

In the previous week that is on 16th June a rake of Sponge P-DRI have been sold by a Raipur based big sponge producer to Punjab at INR 20,000/MT ex-plant & loaded to wagon. Meanwhile, the offers for local buyers was quoted at INR 20,100-20,200/MT ex-plant.