India: Sponge iron prices continue uptrend in Jan'22 on higher raw material prices

Domestic sponge iron (P-DRI and C-DRI) prices across major markets continued to rise by up to 13% in Jan'22, as per SteelMint's assessment.

Prices across major markets

• Raipur: Prices for P-DRI in Raipur, Chhattisgarh were assessed at INR 32,550 exw, increasing by around INR 3,810/t m-o-m. Around 63,800 t of sponge P-DRI deals from this region were recorded by SteelMint last month.
  
  

Sponge C-DRI prices in Raipur increased by INR 3,770 tonne (t) on m-o-m basis to INR 34,480/t exw in Jan'22.

• Bellary: P-DRI prices in Bellary, Karnataka rose to INR 31,690/t exw in January from INR 28,370/t in December. SteelMint recorded about 81,470 t of P-DRI deals from Bellary last month.
  
  

Bellary C-DRI prices were assessed at INR 32,460/t in January, up by INR 2,900/t. Around 42,615 t of C-DRI were traded last month in Bellary.

• Rourkela: Sponge C-DRI prices in Rourkela, Odisha moved up by INR 3,400/t to INR 33,640/t exw last month.
  
  

About 60,680 t of confirmed C-DRI deals from this region were recorded in the month under review.

Factors pushing up sponge iron prices:

• Soaring coal prices amidst limited supply
  
  

Thermal coal prices increased significantly m-o-m in January amidst limited supply at ports.

An acute coal shortage at Richards Bay Port Terminal in South Africa and limited supply from Indonesia surrounding the coal export ban supported portside thermal coal prices.

As per CoalMint's assessment, portside prices of RB2 (5500 NAR) grade coal rose by INR 1,990/t m-o-m to INR 12,990/t exw-Gangavaram in January.

• Rally in billets prices
  
  

Domestic billets prices continued to rally following a rise in coal and metallics (scrap and pig iron) prices and strong demand for the material.

According to SteelMint's assessment, the weighted average price for billets in January stood at INR 45,440/t DAP Raipur, an increase of 9% m-o-m compared to INR 41,760/t.

• Iron ore and pellets prices supported
  
  

Prices of iron ore and pellets remained supported last month backed by active demand, limited high-grade ore availability and hike in pellet export offers.

As per SteelMint's assessment, the monthly average of Odisha iron ore lumps index stood at INR 8,610/t ex-mines in January, up by INR 147/t m-o-m. Odisha iron ore fines index inched up by INR 40/t to INR 5,340/t ex-mines in January.

Meanwhile, the monthly average of SteelMint's bi-weekly pellet index PELLEX stood at INR 11,390/t DAP Raipur last month, up around INR 1,220/t m-o-m.

Outlook

Domestic sponge iron prices are expected to remain volatile due to higher prices of raw material (iron ore, coal and scrap) as well as semi-finished steel amidst subdued demand.