SteelMint: Rourkela sponge iron index rebounds on rising steel prices - 30 Dec

SteelMint's daily sponge iron, CDRI, index is assessed at INR 32,450/tonne (t) (+ INR 200) exw-Rourkela on 30 December, 2022.

About 2,940 t of transactions were recorded today as against 1,400 t on 29 December.

The index edged up due to improved buying activity in the market. The acceleration in buying activity is primarily driven by the surge in steel prices in the northern region, particularly in Punjab. As steel prices rose, there was increased demand for raw materials such as sponge iron, which led to an increase in spot trade volumes.

In addition to the rise in steel prices, producers also kept sponge iron prices strong by increasing billet offers. Rourkela billet prices rose by INR 400/t d-o-d.

Trade Dynamics

• Sponge iron PDRI (FeM 80%) prices in Raipur were assessed at INR 31,950/t exw. Sellers were offering material at higher prices since they have done sufficient bookings but currently trades are not happening at higher prices.
  
  
• Sponge iron PDRI (FeM 80%) prices in Bellary were assessed at INR 30,300/t exw, and CDRI at INR 31,750/t exw. Due to the approaching holidays and low spot buying activity, sources indicate that participants are less responsive to enquiries. Growth in demand and market movement may begin in the coming New Year.
  
  
• Sponge iron PDRI (FeM 78%) prices in Durgapur were assessed at INR 31,100/t and in the range of INR 31,000-31,200/t DAP.
  
  
• Sponge iron PDRI (FeM 78%) prices in Ramgarh were assessed by SteelMint at INR 30,550/t exw, and CDRI at INR 33,050/t exw. Average trade volumes were seen despite hike in offers. Buying interest was impacted as buyers seemed packed with bulk bookings.
  
  

Overall, the combination of higher steel prices and increased billet prices led to an increase in sponge iron prices. This trend is expected to continue as long as demand for steel and raw materials remains strong.

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) - Eight trades in the range of INR 32,200-32,500/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 32,429/t which is given a 50% weightage in the final price calculation.
  
  
• Other Price Indicators - bids/offers/indicative (T2) - Fifteen offers reported in the trading window and considered as T2 inputs. The average price of these fifteen was INR 32,486/t and given a 50% weightage in the final price calculation.
  
  

The final price for sponge CDRI exw Rourkela was at INR 32,458/t, rounded to INR 32,450/t exw.

Click for detailed methodology

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