India: Sponge iron prices rebound in July on active trade following rise in semis prices

Domestic sponge iron (PDRI and CDRI) prices in key markets across India showed some recovery in July after remaining volatile in the previous month. Prices moved higher by up to 10% m-o-m, as per SteelMint assessment.

Interestingly, sentiments in the sponge iron market at the beginning of the month remained positive and hefty volumes were booked. However, towards the middle of the month, the market became subdued as buyers moved to the sidelines after booking sufficient quantities in the first two weeks. The market gained momentum in the last week of July.

Prices in key markets

• Raipur: Monthly average prices of pellet-based sponge (PDRI) stood at INR 34,050/t exw in July, higher by INR 2,630/t m-o-m.
  
  

About 86,600 t of PDRI deals were recorded last month.

• Bellary: Monthly average PDRI prices increased by INR 1,770/t m-o-m to INR 34,290/t exw in July. SteelMint recorded 76,325 t deals in the month under review.
  
  

CDRI prices climbed INR 1,860/t to INR 34,830/t exw. Deals for about 62,730 t were recorded last month.

• Rourkela: Prices of CDRI sponge iron were assessed at INR 35,350/t last month, a rise of INR 3,140/t compared to June.
  
  

Factors supporting sponge iron prices

• Active demand, higher offers: Demand for sponge iron in all key markets remained strong in July, especially in the first two weeks. Healthy bookings were made by mills as steel prices rose in the northern region, especially Punjab. This gave sponge iron makers the confidence to hike their offers. Also, low availability of material in the spot market added to their confidence.
  
  

Moreover, there was a shortage of scrap in the domestic market. This also led to increased buying of sponge iron.

• Rising semis prices: Optimistic sentiments in the sponge iron market were further supported by the rise in semi-finished steel prices and demand. Buying enquiries improved on the back of a rebound in finished steel prices in Punjab.
  
  

The monthly average of SteelMint billet index was assessed at INR 49,300/t exw-Raipur, up by as much as INR 2,900/t m-o-m in July.

• Iron ore, pellets prices rebound: The raw materials prices especially of iron ore and pellets picked up in July as steel sentiments improved slightly.
  
  

Iron ore: SteelMint's Odisha iron ore Fe 62% fines index was rose 5.7% m-o-m to INR 3,480/t ex-mines in July.

Pellets: SteelMint's domestic pellet index, PELLEX, moved up by 8.7% m-o-m to INR 8,620/t DAP Raipur.

• Active exports to Nepal: Sponge iron demand from Nepal remained active in July. Roughly more than 50,000 t deals were reported by Indian sponge-makers to Nepal in the month under review, as per SteelMint data.
  
  

Outlook

Sponge iron prices are unlikely to improve further in the near term as supply has recovered in the spot market with cut back in production by the hot charging plants and furnaces on slow finished steel sales.