Will Indian Sponge Iron Prices Increase Further ?

Indian sponge iron producers seem not in mood to reduce prices immediately as they claim production cost is still higher than current selling prices.

As per the producers, sponge prices will remain strong due to the key factors of high production cost & substitute products as well.

SteelMint learned that, non-coking coal prices in Indian market has gone up approximately by INR 400-600/MT (USD 6-8) in Nov'19. This is expected to reflect similar impact in sponge prices as well.

Further the price rally in scrap offers was cited a major factor for tightening Indian sponge iron market as demand has improved considerably.

As per SteelMint's assessment, Indian domestic scrap prices have surged by INR 1,000/MT (USD 14), while in the global market it climb by USD 15/MT in last couple of weeks.

In line with this it is being analysed that, due to cheaper sponge iron , the producers in Western region have raised sponge proportion to make ingot/billets. The furnaces in Maharashtra, earlier used to melt 30-40% sponge iron, which is currently increased to 40-50% and remaining mix is scrap, either domestic or imported.

Sponge P-DRI landed cost from South or Central region to Jalna, Maharashtra reported at near to INR 18,500-19,000/MT, whereas scrap prices in Jalna is hovering at INR 21,500/MT, both are excluding of 18% GST.

The current offers of sponge P-DRI in major markets hovering at INR 16,400-16,500/MT ex-Raipur, INR 16,400-16,500/MT ex-Bellary, INR 16,800-17,000/MT in Durgapur.