Central India: Power Cuts in Raigarh Weigh Down Sponge Iron Demand

Sponge iron prices in central India are under pressure on account of less consumption due to recent power cuts in Punjipatra, Raigarh based steel mills.

Participants mentioned limited future bookings by major sponge manufacturers. Hence, if the demand continues to remain weak, the prices are expected to come down further in the coming days.

The secondary mills in Raigarh produce about 10,000 MT sponge per day, of which about 80-85% is supplied to Raigarh's local market while remaining is supplied to Raipur & other parts of the country. Thus, post-power cuts, Raigarh's local consumption witnessed a sharp drop which has led to oversupply in neighboring markets and prices to come under pressure.

In the last couple of days, despite stability in billet market, sponge iron prices moved down by INR 200-300/MT in central India.

Yesterday, the Sponge P-DRI offers in Raigarh were reported at Rs 17,800-17,900/MT, which is being offered to Raipur mills at INR 18,500-600/MT on FoR basis. Although, local mills in Raipur were offering the same material at INR 18,600-18,700/MT on ex-plant basis. This has led to limited bookings as buyers are hoping for prices to fall down further.

Meanwhile, prices in east & southern India have marked stability with average supply-demand. Current offers for Sponge P-DRI are hovering at INR 18,100/MT ex-Bellary, INR 17,800/MT ex-Jharsuguda & INR 18,400-18,500/MT ex-Durgapur, for 78-80 FeM.