India: Sponge Iron Offers Drop Over Increased Availability and Limited Inquiries

The sponge iron producers in central, eastern & southern India shared that currently sponge iron prices are trading below par value on account of healthy availability due to limited trades amid free fall in ingot/billet prices.

Indian sponge iron prices plunged by INR 500-1,000/MT in a week & INR 2,000-2,800/MT (USD 28-40) M-o-M with major fall recorded in Raipur, Central India by INR 2,800/MT in a month's time.

The participants in eastern India stated that, selling pressure is continuing with sponge producers despite lower margins. However looking at high cost raw materials (Iron ore & Pellet), anticipations are high that prices should sustain amid upcoming monsoon season, which in general negatively affects sponge iron production. However owing to desperate selling, prices may remain soft in near term.

SteelMint learned that, due to par input cost, a Chandrapur (Maharashtra) based 800-900 TPD sponge manufacturer has already curtailed production by more than 50% for sponge P-DRI and as of now they are majorly using iron ore for making sponge C-DRI to maintain input cost.

Also in Central India - Raipur, the sponge P-DRI manufacturers are reluctant sale sponge at lower offers due to selling pressure. The margins remained low from Pellet to sponge P-DRI. As per industry sources, on an average the price gap between raw pellet & sponge P-DRI should be near to INR 12,000/MT, which is currently not more than of INR 10,000/MT.

Meanwhile in Southern India, Bellary the sponge manufacturers are cautious and looking to hold offers after a reduction of INR 200-300/MT a day before and currently trading P-DRI at INR 17,000-17,200/MT ex-plant.