Indian Sponge Makers Prefers Iron ore Over Pellets
Amid significant fall in domestic Iron ore prices, the sponge manufacturers in Central, East & Southern India are shifting their interest towards Iron ore rather than pellets.
This has led to improved supply of sponge iron (C-DRI) in merchant market, there by narrowing down in premium from P-DRI to C-DRI and the sharp fall in prices. In a month, sponge prices were down by INR 1,200-1,500/MT & premium fell by INR 300-500/MT to INR 1,000/MT in eastern India.
Further as per assessment, in last couple of month's Iron ore prices dropped by 30-35%, while pellets by 25-30% in domestic market.
SteelMint analysis shows that the landed cost of size ore (Iron ore) is cheaper by INR 300-500/MT compared with pellets in Central & Eastern India. Also the producers are fetching premium of INR 1,000/MT on sponge lumps. Hence Iron ore is more preferred than pellets.
The iron pellet manufacturers being confirmed poor buying interest at current offers and if there are inquiries it is on lower price by INR 300-500/MT than the floating offers.
Also it should be noted that, the sponge manufacturers was quite active to book Ore in recent reduce prices by Odisha's 2nd largest miner - Serrajuddin Mines. As per reports, the miner booked close to 1 lakh metric tone lumps on reduced prices by INR 500/MT (USD 7) in couple of days.
The current offers for Fe 63% pellets hovering at INR 5,600-5,700/MT in Durgapur & INR 6,000/MT ex-Raipur, excluding GST. Meanwhile the Iron ore prices in Odisha (5-18 MM, Fe 63%) hovering at INR 3,800-4,000/MT, inclusive of royalty, DMF & NMET. GST @ 5% extra.
Market believes domestic sponge prices to remain volatile on strong supply amid good margins. Also pellet prices to come down on piled up stock with the producers.
source: SteelMint
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