India: Sponge iron prices rise in Sept on costlier coal

Sponge iron (P-DRI and C-DRI) prices across major markets in India increased slightly m-o-m in Sept'21. Prices at the beginning of the month remained almost stable but towards month-end, the rates inched up as coal prices shot up in the domestic as well as global markets, SteelMint understands.

It was also learnt that sponge iron demand and trading in Indian markets remained moderate. Buyers seem to be cautious in booking the material at higher prices.

Price movements across key markets

Raipur: Sponge P-DRI prices in Raipur, Chhattisgarh were assessed at INR 29,700-30,000/tonne (t) exw, equivalent to $400-404/t FOB at the beginning of September. In the middle of the month, prices remained almost stable at INR 29,800-30,100/t ($402-406/t) while in late-September, these increased sharply to INR 32,900-33,000/t ($443-445/t), as per SteelMint's assessment.

Bellary: Sponge P-DRI ex-works prices in Bellary, Karnataka stood at INR 28,400-28,500/t ($382-383/t) in early-September which moved up to INR 30,000/t ($403/t) in mid-September. By the end of the month, SteelMint assessed P-DRI prices increasing to INR 32,300/t exw ($434/t).

Sponge C-DRI prices in early-September stood at INR 30,100/t ($406/t), remaining largely stable in the mid-month but rose to INR 32,800/t ($442) in the month-end.

Rourkela: Prices of sponge C-DRI (FeM 80%, mix) in Rourkela, Odisha were recorded at INR 30,700-31,000/t ($414-418/t) at the start of September. However, by the month-end, prices increased to INR 33,000-33,500/t exw ($443-450/t).

Rising coal prices support sponge iron prices

Sponge iron prices in India remained largely impacted by rising thermal coal prices. As per CoalMint's assessment, the average price of Indian RB2 coal at Gangavaram Port increased by INR 2,075/t m-o-m to INR 11,200/t in Sept'21 as compared to INR 9,250/t seen in Aug'21. Meanwhile, South African RB2 (5500 NAR) grade coal prices shot up by 28% m-o-m to $147/t FOB in Sept'21.

Outlook

Indian sponge iron prices largely depend on the coal price movement and its supply in the domestic market. Thermal coal prices both in the domestic and global markets are expected to remain elevated due to the coal supply crunch in China.