Sponge Manufacturer’s started feeling the heat of the low Sponge price and better realization to Furnace. SteelMint learned that increasing demand and high input cost may boost the Sponge prices anytime soon.
Main reasons that may trigger Sponge price are:
Increased MS Ingot/Billet Production: We can see that Sponge offers from last 5-6 days experienced a slight hike owing to improve demand. Recently, increased production (around 30-40%) of MS Ingot/Billet in Central, West & North regions in India will increase the Sponge demand in near future.
Increase cost of Iron ore: Hike in Iron ore prices by INR 200-600/MT in a week’s time may increase the cost of Sponge. NMDC increased the price by INR 200/MT M-o-M on Dec’13. Odisha miners also increased their Iron ore price by INR 400/MT in mid Dec’13 that impacted Pellet prices resulting in a increase by INR 500-600/MT M-o-M. It’s in the news that Odisha miners may increase further price their Iron ore in Jan’14 due to shortage.
Improve Finish demand: Seasonal demand supporting Semi Finish demand (Sponge, MS Ingot/Billet) across India. Increased Re-bar prices by INR 700-1,500/MT in a week’s time, is a sign of Increase sales.[su_quote] “December mid to March there is a seasonal demand as construction activity expedite. Prices may remain high due to Scrap shortage and limited production,” commented a TMT manufacturer based at Jalna.[/su_quote]
Price may feel pressure due to:
• Increase production of Pellet and Pellet Sponge will keep a check in Sponge iron prices.
• Low buying and low stock maintained by Ingot/Billet manufacturer
• Sponge iron mix in melting is low due to better availability of domestic and imported Scrap.
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