India: Sponge iron prices range bound m-o-m tracking coal price trend

Sponge iron prices in major trading markets across India remained largely stable m-o-m in Oct'21. Prices at the beginning of the month increased significantly across regions owing to higher coal prices. These, however, fell end-October to the levels assessed in end-Sept'21.

Prices and deals in major markets

• Raipur: Sponge iron (P-DRI) prices in Raipur, Chhattisgarh were assessed at INR 33,500-34,000/tonne (t) exw at the beginning of Oct'21. In mid-month, prices increased slightly to INR 35,000-35,200/t but decreased again towards month-endto INR 33,000-33,200/t.
  
  

SteelMint recorded a total of 54,000 t of confirmed deals of sponge P-DRI in Raipur last month.

• Bellary: Sponge P-DRI prices in Bellary, Karnataka were recorded at INR 33,000-33,700/t exw in early-October. However, these were range bound at INR 33,500-33,600/t in end-October.
  
  

Meanwhile, sponge C-DRI prices in Bellary remained largely stable in October. Prices at the beginning of the month were assessed at INR 34,200/t exw which towards the month-end stood at INR 34,000-34,200/t.

Deals of total 29, 850 t of sponge P-DRI and 29,000 t of C-DRI were recorded in Bellary last month, as per SteelMint's assessment.

• Rourkela: Prices in Rourkela, Odisha were assessed at INR 34,700-35,000/t exw in early-October which increased to INR 36,800/t towards mid-month. In end-October, these fell sharply to INR 34,700-34,900/t.
  
  

A total of 33,640 t of sponge C-DRI were traded in this region last month, SteelMint assessed.

Falling coal prices pressure sponge iron prices

The significant decline in domestic sponge iron prices remained largely impacted by falling coal prices alongside decreasing semi-finished steel prices.

A sharp fall in China's thermal coal prices pulled down South African coal prices last month as RB1 (6000 NAR) prices corrected to $165/t as on 28 Oct'21 from a high of $244/t as on 14 Oct'21 for the November contract.

As a result, portside RB2 prices across various ports in India also followed suit, falling by 14.2% m-o-m.

Outlook

With coal prices trending down, sponge iron prices are expected to continue falling in the short-term. In addition, falling semi-finished steel prices in the domestic market may also affect sponge iron prices.