Eastern India Sponge Prices Climb Amid Increase in Billet Offers
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Sponge iron prices in eastern India continue to rally, however it remained more or less firm in central & southern regions.
As per participants in eastern India (Odisha & West Bengal), sharp surge in Billet prices is one of the key factor behind hike in sponge prices. Currently no mismatch was reported in supply-demand scenario and with the surge Billet prices, sponge makers have opted to raise offers in same proportion.
It should be noted that despite falling Iron ore & Pellet prices, the producers are raising sponge prices. Hence, the producers didn't have selling pressure, leading to significant hike in prices.
In eastern India, Durgapur, the offers for FeM 78 Sponge C-DRI (mix material) reported at INR 21,200/MT & P-DRI at INR 20,000/MT. Meanwhile offers for FeM 79-80, Sponge C-DRI in Rourkela, Odisha hovering at INR 20,200-20,400/MT ex-plant. The prices surge by INR 400-500/MT in Rourkela & INR 1,500/MT in Durgapur, W-o-W.
Coming to central & southern India sponge market, where producers are maintaining offers at same levels over improved supply amid usual bookings.
The participants in central India - Raipur reported improved supply as couple of integrated plants have resumed sales in merchant market after a long span.
Further in southern India, demand some how reduced as closed furnaces in Silvassa - Daman and Diu, has slightly lowered inquiries for sponge iron. Meanwhile demand from Maharashtra continue to remain average, which resulted in price stability with minor fluctuations.
The latest offers for FeM 80, Sponge P-DRI in Raipur, central India evaluated at INR 19,500-19,700/MT & in Bellary, southern India it hovering at INR 19,500-19,600/MT (ex-plant).
What May Happen ?
As per Industry leaders, sponge iron prices are less likely to gain further as scope is high for further fall in raw materials (Iron ore & Pellet). This may force producers to hold their offers.
Another key factor behind assumptions of slight change in sponge iron market stated, falling prices of ferrous scrap in global market, which may influence furnaces to raise scrap consumption as it will be competitive in newer bookings.
Sponge iron Prices as on 1st Jan 2019
| Markets | Sponge iron | Prices | D-o-D | W-o-W |
| Raipur (FeM 80) | C-DRI | 21,200 | 100 | 200 |
| P-DRI | 19,600 | - | 150 | |
| *Durgapur (FeM 78) | C-DRI | 21,200 | 50 | 1,500 |
| P-DRI | 20,000 | 50 | 1,500 | |
| Rourkela (FeM 79-80) | CDRI | 20,200 | 200 | 400 |
| Bellary (FeM 80) | C-DRI | 19,900 | - | -100 |
| P-DRI | 19,550 | - | -50 |
Prices are ex-works, excluding GST & in INR/MT
*Including local freight
Source: SteelMint Research
