Indian Sponge Iron Manufacturers May Curtail Production

Stand-alone sponge iron plants in central & eastern India are looking to cut production to put plant on regular maintenance, SteelMint learned from 100-500 TPD merchant sponge iron suppliers.

As per them, fresh purchases of raw materials i.e. iron ore & pellets are on hold as at current price range they can't afford to sell sponge iron due to loss making situation.

"Till we have raw materials delivery of earlier bookings, plant will be operational and if same situation persist, will go for shut-down in operations," one of the renowned sponge iron producer in Raipur, Central India stated.

SteelMint also learned that, fresh bookings of iron ore are limited with the Odisha merchant miners, hence there are anticipations of price reduction in domestic iron ore. Also, no fresh bookings for raw pellets was reported by sponge manufacturers, the officials from major pellet producers quoted.

Hence production of sponge iron is expected soon to get disturbed as per comments received from the raw materials suppliers and the sponge iron producers as well.

The sponge iron offers have fallen sharply in Central India & hit over more than 1 year low as similar price levels were last seen in Nov 2017 and the latest offers hovering at INR 15,700-15,900/MT for P-DRI & INR 17,700-17,800/MT for DR-CLO grade material on ex plant basis.

The key factor behind sharp slump in prices cited, fall furnaces production by 50% in Punjipatra industrial park, Raigarh due to 50% power cut by Jindal Steel on technical issue. Thus has resulted in excess supply of sponge iron in Central India.

Further in Odisha, 300 TPD Sponge makers stated, "We are working at-par value due to limited buying interest, however expected fall in iron ore offers seems to give them relief in coming days".

While a prime grade sponge manufacturer from Bellary quoted, "We are planning to curtail production to meet demand-supply chain, as of now we are unable to run units with current cost of production versus lower selling prices."

Furthermore the industry experts stated that, sponge iron price scenario will be more depend on raw materials i.e. Iron ore & Pellet price movements in the coming days. However limited supply amid monsoons is one factor which may keep iron ore prices tight.