India: Sponge iron production rises by 13% y-o-y in Nov'21

India's sponge iron production was recorded at 3.24 million tonnes (mn t) in Nov'21. Output grew by 12.5%, y-o-y, compared to 2.88 mn t in the same month last year, as per data maintained with SteelMint.

On a monthly basis, the country's sponge iron production registered a rise of 4.1% against 3.11 mn t in Oct'21.

Output rises in Jan-Nov'21

India's sponge iron production in the first 11 months of CY'21 reached 33.77 mn t, up 12.5% y-o-y as against 30.01 mn t in Jan-Nov'20.

The Covid-19 pandemic and the subsequent lockdown in 2020 severely impacted sponge iron production. This, of course, accounts for the major hike in production this year.

Total production in CY'20 was recorded at 34.35 mn t, according to data maintained by SteelMint. Of this, the share of iron pellet-based DRI was roughly 65%, while the rest was produced from iron ore lump.

Price trend

Sponge iron prices in India continued their downward trajectory in Nov'21. SteelMint's assessment for sponge iron, P-DRI, in Raipur, central India was recorded at INR 28,900/t exw in Nov, down INR 3,800/t m-o-m. The continuous fall in sponge iron prices is attributed to falling raw material prices (iron ore, pellets and coal) along with declining scrap prices in the month under review.

Exports rise

Sponge iron exports in Nov stood at 50,000 t, up 25% y-o-y compared to the same month last year. On a monthly basis, exports jumped 67% against 30,000 t in Oct.

India's sponge iron exports were recorded at 0.56 mn t in Jan-Nov, data maintained with SteelMint shows. Bangladesh remained the largest importer with 280,000 t, followed by Nepal with about 230,000 t.

In the past few months, its imports of sponge iron from India from Nepal have seen a spurt. Total exports of the material to Nepal from India in CY'20 were recorded at 170,000 t, an increase of 17%, y-o-y, compared to 140,000 t in CY'19. India's sponge iron exports is expected to increase in the near term with setting up of new furnaces in Nepal and the resumption in operations at existing furnaces.

SteelMint's sponge iron (FeM 80%, lumps 100%) export price assessment to Bangladesh dropped by $40/t m-o-m to $440/t CPT Benapole in Nov'21.

Outlook

At an estimated monthly rate of roughly 3.2 mn t, India's sponge iron production may touch 38-40 mn t in FY'22. SteelMint expects that higher prices of substitute products and coal are likely to keep sponge iron prices supported in the near term.