Production Curtailment by Furnaces Weigh Down Indian Sponge Iron Prices

Sponge iron prices in southern & eastern India dropped to 2 years low, whereas in central region it is trading near to 20 month's low, as per assessment maintained with SteelMint.

Industry participants reported, prices are falling continuously on account of poor demand from local electric arc furnaces or induction furnaces due to curtailed productions & fall in substitute product prices amid lower sales of finished steel.

As per assessment, latest offers for Sponge P-DRI is about INR 15,700-15,900/MT ex-Raipur, INR 14,700-14,900/MT in Durgapur and INR 15,600-15,800/MT ex-Bellary for 78-80 FeM grade.

On weekly basis, the major fall was seen in Durgapur, east India by INR 1,600/MT (USD 23). As per trade participants, “No major inter & intra state trades were noticed over falling ingot/billet production due to shuttering mills & increased supply led to free-fall in prices.”

Also sponge manufacturer in central India stated, “Falling prices of raw materials like iron ore/pellets amid competitive offers from outside suppliers, leads to price competitiveness/corrections among local suppliers.”

Few deals of Sponge (P-DRI) reported at INR 15,700-15,800/MT FoR Raipur. However offers through the local suppliers hovering at INR 15,800-15,900/MT ex-plant, which landed cost reported at INR 16,000/MT.

Further, the participants from eastern region - Odisha reported, very limited buying at the prevailing offers of INR 15,800-16,000/MT (ex-plant) for FeM 80 C-DRI mix material. Further if sources are to be believed, few deals of FeM 80 C-DRI mix material at near to INR 16,200-16,300/MT FoR Raigarh, which is quite competitive than prevailing offers in general market.

Additionally, the current sponge prices in east India have declined to 2 years low as similar offers was recorded during July-Aug'17.

Further in Bellary few small size sponge producers (100-300 TPD) stated that there is less demand from West (Maharashtra & Gujarat) as well from domestic market. BMM Ispat, a price trend setter in southern India has lowered offers by INR 200/MT to INR 15,700-15,800/MT ex-Bellary, as per officials.