Sponge iron prices in India fall due to weak buying activity - 2 Feb

Sponge iron prices in India fell by INR 200-450/t leading to a decline in trading activities today. This trend is due to lower bids followed by volatile prices which have turned buyers cautious and restricted their procurement to just fulfilling their immediate needs on lower offers. As a result, prices continue to soften.

In addition to lower bids, there is also the lack of confidence in the market about rebound in offers. This has led to limited trades, despite lower offers, contributing to limited enquiries in the market and a drop in prices on d-o-d basis.

According to SteelMint, uncertain price movements have also had an impact on spot trade volumes. About 10,010 t of sponge iron transactions were recorded today in India as against 23,650 t on 1 February.

Snapshots of key markets

• Rourkela: Prices fell as trade volumes were recorded at less-than-average levels, resulting in softening in offers. There was lack of confidence among market participants with regard to price movements. Thus, spot trades continued to remain somewhat limited. Buyers kept booking material as per requirement even as price correction continued to happen. Market players waited on the sidelines for clear market directions to emerge before taking positions, resulting in weak spot trading.
  
  
• Raipur: The market remained sluggish, with no significant trades reported. Offers were on the lower side and buyers were bidding at very low rates, resulting in limited trading today. Prices fell by INR 200/t. Moreover, buyers refrained from purchasing at levels offered in anticipation of a price drop in the near term.
  
  
• Bellary: Low demand and fewer enquiries for sponge iron pulled down offers, which had an impact on today's spot buying activity. Buying of finished steel in India remains limited.
  
  
• Durgapur: Spot trades were on the lower side today. Prices went downwards today because of bearish sentiments in the northern region. Sellers were forced to reduce offers as buyers remained quiet and moved away from bulk procurement. Prices fell by INR 450/t d-o-d.
  
  
• Ramgarh: Demand from the nearby regions remained low. Liquidity issues in the market was the key reason for slow movement of semis and finished products. Sellers reduced sponge iron offers by INR 350-450/t due to selling pressure.
  
  

Rationale -

This index has been derived based on transactions, offers, bids and indicative price data sets. Transactions are considered as T1 and given a weightage of 50% whereas other data sets are considered as T2 and given a weightage of the balance 50%.

Click for detailed methodology

T1 - Trade, T2 - Offer/Bid/Indicative