India: Sponge iron market softens on weak finished steel demand

• Sponge iron prices decline by INR 50-300/t
  
  
• Trade volumes drop sharply on sluggish buying
  
  

India's domestic sponge iron market remained under pressure on 6 July, with prices continuing to decline amid sluggish demand and weak market sentiment. Sponge iron prices fell by INR 50-300/t d-o-d across most regions. The correction was primarily driven by sluggish buying activity and weak market sentiment, with sellers lowering offer prices to conclude deals, resulting in most transactions being booked at the lower end of the prevailing price range.

Overall market sentiment remained cautious, with sponge iron prices in the central and eastern regions declining by INR 100-300/t to stimulate buying activity.

Regional sentiment:

In the central region, demand remained largely need-based, limiting fresh bookings. However, the price premium in the southern market over the central region enabled central region-based suppliers to secure orders from south Indian buyers, lending some support to trade despite the overall weak demand.

In the eastern region, weak buying interest, coupled with a government holiday in West Bengal, further slowed trading. Most transactions were restricted to immediate requirements, with no major bulk deals concluded.

Finish steel:

The finished steel market also remained weak, with prices declining by INR 100-500/t during the day. The continued lack of support from the finished steel segment weighed on sponge iron demand, resulting in slower trade across regions.

Raw material:

Despite the softer market, sponge iron producers refrained from aggressive price cuts due to persistent margin pressure and relatively firm raw material costs, including coal and raw pellets. Consequently, the scope for further sharp price corrections appears limited in the near term unless demand improves significantly.

BigMint recorded approximately 14,000 t of sponge iron trades today, about 8,000 t lower than the previous trading day, reflecting subdued market sentiment.

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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