India: Soft steel demand weighs on sponge iron prices - 30 Jan

In some key markets today sponge iron prices dropped in the range of INR 50-200/t. While prices in the north and east remained comparatively lower, prices in the south increased by INR 200-250/t. Due to the ongoing downturn in steel prices in north India, specially Punjab, prices kept dropping as spot transactions remained restricted.

The consequence was a steady decline in both offers and bids as a result of selling pressure among suppliers. Fewer enquiries were made as price adjustments trigerred caution among market participants. According to sources, erratic price changes have impacted spot trade volumes.

About 22,080 t of sponge iron deals were recorded today in India as against 13,350 t on 28 January.

Snapshots of key markets

• Rourkela: Prices trended down on account of lower bids followed by volatile prices in north India. This kept buyers cautious and they procured material as per immediate requirements and on lower offers. Thus, prices continued to soften. Further, there was lack of confidence in the market about a rebound in offers soon, which kept trades limited despite lower offers.
  
  
• Raipur: Limited booking was witnessed amid subdued demand. Prices remained unchanged as there was low acceptance of high offers. Sellers were not able to keep offers at a higher level due to low demand. The market in the northern region market also witnesssed fluctuations today.
  
  
• Bellary: Increased offers for sponge iron led to an improvement in spot buying activity and buyers are now looking forward to market stability returning as better demand for finished steel boosted buying confidence.
  
  
• Durgapur: Spot trades were low today due to limited demand and the market is expected to remain volatile. Prices edged down by INR 200/t d-o-d.
  
  
• Ramgarh: Bookings remained moderate amid price correction. The market continued to show a downward trend, decreasing by INR 100/t. Buyers seemed to be hesitant about bulk bookings in a highly volatile market. So sellers had to lower their offers.
  
  

Rationale -

This index has been derived based on transactions, offers, bids and indicative price data sets. Transactions are considered as T1 and given a weightage of 50% whereas other data sets are considered as T2 and given a weightage of the balance 50%.

Click for detailed methodology

T1 - Trade, T2 - Offer/Bid/Indicative