Factors Effecting Sponge Iron Prices

 

1. Significant Increase Iron Ore / Pellet Prices – .

In Raipur pellet offers have increased further significantly and hit 6 years high. Current Pellet rate is at INR 10000MT (basic, GST extra) in a month’s time prices have climbed by INR 3,500/MT. almost 50% increase in pellet cost

 

Factors Affecting  Pellet Prices -

1. Limited offers in merchant market: Central India based major pellet makers like Godawari Power & Ispat are still not offering owing to decent export bookings made, led to the material shortage in the merchant market. Other pellet makers are offering limited quantities in the merchant market.

Eastern India based major pellet makers like JSPL, Arya Iron & Steel, BRPL are also not offering in merchant market on limited material availability.

2. Price hike by Odisha based merchant miners: Odisha based merchant miners had increased prices by INR 1100-1200 /MT. This has made Odisha iron ore prices to hover close to 6 years high.

3. NMDC (C.G) iron ore price hikes: National Mineral Development Corporation (NMDC) has announced price revision for September delivery. The miner had increased prices by INR 150-370/MT.

4. Weather Constraint resulting in Shortage of ram material: Amid monsoons production and dispatches of material have been hampered. Production is badly effected

 

2. Significant increase in Domestic CIL coal cost and increased South Africa cost

1. Domestic cost coat: All sponge iron unit has been lapsed their existing Linkage and they have taken coal under Linkage auction which fetches premium in tune to 1300 to 1800 pmt resulting significantly increased Coal cost which effected sponge iron ore

2. Imported coal cost: due to foreign currency fluctuation and Imported SA coal price increased significantly which effected coal cost resultant increase in SA coal

3. Healthy bookings of pellet & sponge: Integrated plants reported that currently they had hefty bookings for iron pellets & sponge. The producers in Raipur, Durgapur & Odisha have booked bulk export orders of pellets. Further sponge iron bookings being stated healthy, hence prices may increase.

4. Supply-demand mismatch: In general during the monsoon season induction operations are for limited hours, however in current year the production levels of Ingot/Billet stands healthy, resulting high consumption of sponge iron. Although the sponge iron productions are low resulting in less supply & high demand for sponge iron.

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