India: Sponge iron prices rebound in Dec'21 on rising coal prices

Domestic sponge iron (P-DRI and C-DRI) prices rebounded across markets in Dec'21 backed by a sharp rise in coal prices.

Prices in different regions

• Raipur: Sponge P-DRI (lumps, FeM 80% +/-1) prices in Raipur, Chhattisgarh rose by around INR 2,050/t on the month to INR 30,950/t on exw basis.
  
  

Prices of C-DRI (mix of 50% lumps-50% fines, FeM 80%, +/-1) increased by INR 1,500/t m-o-m to INR 32,500/t exw-Raipur.

A total of around 66,500 t of sponge iron deals were concluded in Raipur in Dec.

• Bellary: Sponge iron C-DRI (lumps 100%, FeM 80%, +/-1) prices moved up by INR 800/t m-o-m to INR 31,000 t exw. P-DRI (100% lumps, FeM 80%,+/-1) prices in Bellary were assessed at INR 30,100/t exw, up INR 1,400/t m-o-m.
  
  

Around 84,250 t of sponge iron P-DRI and 41,950 t of C-DRI deals were recorded in Bellary in Dec'21.

• Raigarh: Sponge iron C-DRI (mix of 50% lumps-50% fines, FeM 80%, +/-1) prices rose by INR 2,200/t to INR 32,200/t exw. Sponge P-DRI (lumps, FeM 80%, +/-1) prices rose by INR 2,200/t to INR 30.200/t exw.
  
  
• Rourkela: Prices of C-DRI material (mix of 70% lumps-30% fines, FeM 80%, +/-1) increased by INR 1,400/t m-o-m to INR 32,200/t exw.
  
  

Deals of around 47,770 t of sponge iron were recorded in Rourkela in Dec'21.

• Durgapur: Sponge C-DRI (mix of 70% fines-30% lumps, FeM 78%, +/-1) prices inched up INR 250/t to INR 31,950/t DAP Durgapur. However, P-DRI (lumps 5-18mm, FeM 78%, +/-1) prices in this region dipped INR 150/t to INR 29,450/t DAP.
  
  

Rising coal prices

Domestic coal prices rebounded last month amidst an acute shortage at Indian ports and also backed by the rise in global coal prices. Coal vessel arrivals from South Africa reduced due to limited stocks at RBCT due to disruptions to logistics, poor maintenance of Transnet rail lines, cable theft and financial hurdles.

Hurdles to coal transportation squeezed out inventory at RBCT to 2 million tonnes (mn t) in the last week of Dec against a weekly average of 5 mn t.

Portside prices of South African RB 2 (5500 NAR) coal increased by INR 2,000/t m-o-m to INR 12,000/t ex-Gangavaram on 31 Dec.

Billet prices rebound

Domestic billet prices bounced back last month on a m-o-m basis after a sharp correction over the past couple of months. A significant rise in coal prices and improved demand for finished steel supported semi-finished steel prices, thereby pushing up sponge iron prices.

SteelMint's daily billet index was assessed at INR 43,600/t exw on 31 Dec'21, up INR 2,200/t m-o-m.

Outlook

The rising trend in coal prices is likely to continue in Jan, providing support to sponge iron prices. However, the resurgence in Covid-19 cases (the third wave) that are threatening another spell of regional lockdowns in the country could dampen sponge iron demand in the near term.