India: Sponge iron prices inch down marginally in June on declining raw material prices

Domestic sponge iron (PDRI and CDRI) prices across key markets in India showed a fluctuating trend throughout June. Prices in the beginning of June declined only to inch up towards the middle of the month. Prices exhibited mixed trends with slight fluctuations in late June.

The key reason weighing down sponge iron prices was falling steelmaking raw material (iron ore and pellets and, to an extent, coal) prices.

Although prices fell, both buyers and sellers in the market remained active and healthy volumes were traded last month.

Prices across key markets-

• Raipur: Monthly average prices of pellet-based sponge (PDRI) stood at INR 31,430/t exw, down INR 2,410/t m-o-m.
  
  

About 101,320 t of PDRI deals were recorded last month.

• Bellary: Monthly average PDRI prices decreased by INR 1,930/t m-o-m to INR 32,520/t exw in June. SteelMint recorded 53,400 t deals in the month under review.
  
  

CDRI prices dropped INR 2,290/t to INR 32,970/t exw. Deals for about 45,490 t were recorded last month.

• Rourkela: Prices of CDRI sponge iron were assessed at INR 32,210/t in June, a decrease of INR 2,610/t compared to May.
  
  

A total of 100,440 t of deals were recorded in the month.

Market highlights-

Declining raw material prices weigh on sponge iron

The export duty imposed on steelmaking raw materials (iron ore and pellets) and steel products continued to put pressure on sponge iron prices.

• Iron ore: SteelMint's assessment of Odisha iron ore Fe 62% fines index fell sharply by 34% m-o-m to INR 3,290/t ex-mines in June from INR 5,000/t in May.
  
  
• Pellet: SteelMint pellet index, PELLEX, also fell by 21% m-o-m to INR 7,030/t DAP Raipur in June.
  
  
• Coal: The monthly average price of the benchmark RB2 grade coal was assessed at INR 19,000/t exw Gangavaram, down INR 3,250/t compared to the May monthly average price of INR 22,250/t.
  
  

Improved supply drags down prices

Sponge iron supply improved in June. This also had a slight impact on prices. Sponge iron suppliers remained active in the market even at lower offers to get as many deals as they can ahead of the monsoon.

Demand recovery limits sharp price fall

The pace of price decline in sponge iron was, however, slower as there was better demand at lower prices.

Trading remained active with healthy volumes booked across markets last month.

Some export deals were also concluded to neighbouring Nepal, SteelMint reported.

Outlook

Sponge iron prices will likely remain on the higher side in July on strong buying interest and healthy deals happening in different states along with low seasonal productivity, SteelMint notes.