SteelMint: Rourkela sponge iron index inches down on lower bids - 22 Dec

SteelMint's daily sponge iron, CDRI index, was assessed at INR 30,800/tonne (t) (- INR 50) exw-Rourkela on 22 December, 2022.

About 2,300 t of transactions were recorded today as against 1,800 t on 21 December.

The Rourkela sponge iron index has trended down due to a combination of factors. One of the main reasons are the lower bids that have been received for sponge iron in the market. This has made it difficult for sellers to find buyers willing to pay the prices they are asking for.

Another factor that has contributed to the downtrend in the Rourkela sponge iron index is the volatile steel prices in the north Indian market. The prices of sponge iron have been fluctuating widely, making it difficult for buyers to predict what they will have to pay for the material. This has led to caution among buyers, who have been procuring material only as per their immediate needs and on lower offers.

The lack of confidence in the market about a rebound in offers has also contributed to the downtrend in the Rourkela sponge iron index. Many traders are hesitant to enter into deals for sponge iron because they do not believe that prices will bounce back soon. This has kept trades limited, even though offers for sponge iron are currently lower.

Overall, prices for sponge iron may continue to soften in the short-term, it is possible that they could eventually rebound as market conditions improve.

About 800 t of sponge iron PDRI (FeM 77-78%) trade was recorded from Odisha today as against 2,600 t from yesterday. Deals were concluded on DAP Raipur basis.

Premium grade (FeM 81-82%) sponge iron from Odisha was booked by Jalna based buyers at INR 33,000/t exw-Rourkela.

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%.

• Transactions (T1) - Three trades in the range of INR 30,700-31,700/t was recorded during the 11:30 am to 5:30 pm SteelMint trading window and considered for final price calculation as T1 inputs. The average of these transactions was INR 30,888/t which is given a 50% weightage in the final price calculation.
  
  
• Other Price Indicators - bids/offers/indicative (T2) - Eighteen offers reported in the trading window and considered as T2 inputs. The average price of these eighteen was INR 30,757/t and given a 50% weightage in the final price calculation.
  
  

The final price for sponge CDRI exw Rourkela was at INR 30,823/t, rounded to INR 30,800/t exw.

Click for detailed methodology

T1 - Trade, T2 - Offer/Bid/Indicative, *Normalized price as per methodology