India: Sponge iron prices gain d-o-d on improved demand

• Trade volumes nearly double d-o-d as buyers return to market
  
  
• Production costs steady, as pellet prices rise, iron ore holds firm
  
  

Sponge iron prices increased by INR 100-500/t d-o-d across major regions on 3 February, while Bellary and Hyderabad markets witnessed a marginal decline of around INR 100/t. Trading activity was strong throughout the day, as buyers returned to the market after subdued interest over the past few sessions, leading to improved market participation. The recent dull phase in purchases resulted in pent-up demand, which supported todays buying momentum and helped prices firm up in most regions.

Prices found support amid improved demand from both the finished steel and billet segments, which helped lift buying interest in sponge iron during the day. Market participants indicated that enquiries picked up compared to previous sessions, improving overall sentiment in the market. Expectations of further improvement in demand supported price stability. Under the current market conditions, prices are likely to stabilise and remain at around these levels in the near term.

Trade volumes increased sharply to around 21,800 t from nearly 10,800t in the previous session, reflecting improved buying activity and stronger market participation. On the cost front, raw material prices edged up by INR 200/t, with pellet prices in Raipur assessed at INR 9,850/t ex-works, while iron ore prices remained steady, providing continued cost-side support to DRI producers.

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%.