Indian Sponge Iron Industry Sees Moderate Demand As Prices Fluctuate

Due to concerns about potential changes in tax parameters on raw materials, buyers are unwilling to place large orders. It has resulted in low to moderate demand, according to trade sources in central and eastern India. Suppliers are maintaining higher prices in anticipation of demand recovery, while most buyers are waiting for the Union Budget declaration on 1 February 2023.

On the price front, prices of Indian sponge iron (DRI) remain volatile, fluctuating by Rs 100-500/ ton. It is because demand continues to vary in major producing markets. Offers for pellet-based sponge iron were reported at around Rs 32,000-32,200/ ton, while some bids have been reported at nearly Rs 31,800-31,900/ ton ex-works Raipur. In Durgapur, offers were at around Rs 31,900-32,000/ ton ex-works.

Demand’s Impact On Offers & Prices

Due to the reduced demand for sponge iron, producers in Raipur have lowered pellet offers by Rs 300/ ton and reported sufficient deals (of around 20,000-30,000 tons) on revised offers of Rs 9,700-9,800/ ton ex-works Raipur for Fe 63% pellets. Meanwhile, a plant in Kharagpur (West Bengal) has reported deals for pellets at Rs 9,000-9,200/ ton ex-works.

As per major sponge iron makers in central and eastern India, they are not in a hurry as dispatches are already due for previous orders. Therefore, they have decided to wait and watch until demand and price recovery occur.

Insight

The rise in prices of primary steel mills and strong global trends have supported the prices of secondary steel mills. If the Union Budget declaration is favourable for the industry, there is potential for a recovery in prices of raw materials to finished goods products for secondary steel mills.

Read more: Pellet Prices In India Changed After A Significant Rally