India: P-DRI Manufacturers Reel Under Pressure on High Input Cost

Presently the Pellet Sponge manufacturers in Central & Eastern India are reeling under pressure of lowered prices than the cost of production.

The margins remained low from Raw Pellet to Sponge P-DRI in major markets like - Raipur & Durgapur for standalone manufacturers. SteelMint in data analysed that standalone sponge plants are experiencing gap of INR 1,500-2,000/MT between cost of production of sponge P-DRI and selling price in domestic market.

The sources here mentioned that, sponge demand is weak on account of lower exports & limited domestic demand which in turn has resulted in price fall in both raw pellet & sponge pellet which in turn has led to low margins.

If we compare current cost of productions, the selling price of Sponge P-DRI should be not less than of INR 21,500/MT ex-Raipur & INR 20,500/MT in Durgapur.

However as per assessment, presently the trades are happening at INR 19,700-19,900/MT ex-Raipur & INR 18,100-18,300/MT in Durgapur, which are lower by INR 1,500-2,000/MT (USD 21-28) than the cost of productions of standalone sponge plants.

For an outlook purpose a key price trend setter in Durgapur, East India stated “there is no scope for further major fall in prices, if we looking current input cost against cheaper sponge trade price. However as the buyers purchase interest is almost nil, we are reluctant to cut offers.”

Manufacturers from Southern India quoted, “We are planing to curtail production to meet demand-supply chain as high stock is forcing us to reduce offers day-by-day. We are unable to run units with current cost of production versus lower selling prices.”