India: Sponge iron prices jump on raw material concerns amid geopolitical tensions

• South African thermal coal prices may rise on logistics hurdles
  
  
• Trade slows down amid approaching Holi, elevated prices
  
  

India's sponge iron (DRI) market witnessed a sharp price rise of INR 600-1,950/tonne (t) d-o-d across major producing regions on 2 March 2026, due to concerns over potential raw material disruptions amid escalating geopolitical tensions between Israel and Iran.

Market participants raised spot offers sharply, anticipating a possible surge in South African thermal coal costsand logistical bottlenecks if tensions in the Middle East intensify. The fear of supply chain disruptions, particularly in coal and related inputs, prompted producers to revise prices upward.

However, the sharp increase in offers led to a widening bid-offer gap. Buyers remained cautious, limiting bookings to urgent requirements while seeking clarity on the sustainability of the price surge. Additionally, the upcoming festive holidays (Holi) are expected to disrupt dispatch schedules, which further dampened aggressive procurement.

A Raipur-based sponge iron producer said, "Offer levels have increased due to global uncertainty, but actual buying is selective as mills await clear market direction."

Despite the bullish undertone in offers, daily trade volumes were estimated at around 7,800 t, indicating moderate participation compared with recent sessions. Most transactions were concluded at negotiated levels rather than at peak offers.

The market closed with heightened volatility, balancing raw material cost fears against cautious downstream demand. Finished steel offtake remains a key determinant for sustained price movement.

Rationale

Prices have 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%.

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