India: Sponge iron prices continue to decline on sluggish spot trading - 8 Feb

Indian sponge iron prices declined in the range of INR 150-500/t in key locations today. Prices of sponge iron have been fluctuating widely making it difficult for buyers to predict prices. This has led to caution among buyers who are procuring material only as per their immediate needs and on lower offers.

The lack of confidence in the market as regards a rebound in offers has also contributed to the downtrend in sponge iron prices. Many traders are hesitant about entering into deals because they do not believe that prices will bounce back soon. This has kept trade volumes limited, even though offers for sponge iron are currently lower.

Overall, prices for sponge iron may continue to soften in the short term. It is also possible that prices might rebound as market conditions improve.

About 13,060 t of sponge iron transactions were recorded today as against 11,600 t on 7 February.

Snapshots of key markets

• Rourkela: Sponge iron prices trended down due to a combination of factors. One reason was the lower bids received which made it difficult for sellers to find buyers willing to pay the price they are looking for. Another factor was volatile steel prices in the north Indian market.
  
  
• Raipur: Moderate booking was observed as prices dropped. The market continued to show a downward trend and limited trading activity was heard at lower prices as buyers remained hesitant about booking material at higher offers.
  
  
• Bellary: Slower buying weighed on sponge iron prices today, with the market generally weakening due to weak trends in the semi-finished and finished steel segments and low trade volumes.
  
  
• Durgapur: Spot trades were moderate as demand from buyers were limited which ultimately forced sellers to reduce offers.
  
  
• Ramgarh: Demand for semis remained sluggish today as buyers appeared less interested in booking material at current offers. Also, the continuous downtrend in prices has instilled a sense of caution in market participants who are anticipating a further price correction.
  
  

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