Central India Sponge iron Prices Likely to Remain Supported - Market Participants

Sponge iron prices in Raipur, Central India may remain supported owing to less expectation in further decline in raw materials prices and tight supply of sponge iron.

Chhattisgarh (Raipur), Central India is one of the major producer of Sponge iron in India having an installed capacity of more than 9 MnT pa. As per sources, more than 50 standalone sponge iron plants are operational which supply material for both local market and West & Northern India.

Recently the prices of Sponge P-DRI (produced through iron pellet) has increased consistently by around INR 500/MT in the past one week on improved demand and coupled with rising Billet prices and strengthening raw materials (Pellet).

The current prices of Sponge P-DRI in Raipur hovering at INR 20,400-20,500/MT, which was last week traded at INR 20,000-20,100/MT ex-plant.

Similarly the Iron pellet prices, which is in priority for sponge makers due to higher prices of Iron ore, has slightly gain and currently stood close to INR 6,500/MT, earlier in Nov'18 few bulk deals was recorded at close to INR 6,200/MT ex-plant.

Market believes that pellet prices will remain supported since producers are occupied with bulk bookings which was made during Nov'18.Thus they are planning to surge prices following better demand for Sponge iron.This may also compel producers to keep sponge prices on higher side

Another key factor behind price support of sponge iron noted that, one of Integrated plant in Raipur which had installed capacity of Pellets about 1.2 MnT & Sponge iron about 0.5 MnT, has close down for routine maintenance which is expected to be operational in Jan'19.Thus due to this disruption local supply of Sponge iron & Pellet may get affected and this can support prices in local market of Raipur.