Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

India’s National Mineral Development Corporation (NMDC) has raised iron prices for both lumps and fines by Rs200/mt ($2.65/mt) effective June 30. Iron ore fines will be priced at Rs2,160/mt and lumps at Rs2,450/mt as per the recent press release by the company. These revised prices exclude royalty, permit fee and other taxes.


Higher prices for iron ore in the global market and an improvement in demand from integrated steel mills from mid-May onwards has pushed up domestic ore prices, said traders. Internationally iron ore is trading at above $100/mt. Most steel mills have resumed and some are even ramping up production capacity after the government eased lockdowns in many parts of India.


Impact on sponge iron

Sponge iron manufactures based in Central India have also increased the prices following the prices increased by NMDC as per the steel mills in Raipur on Thursday. Manufacturers expect sponge iron prices to remain firm over the near term as mills are producing at a much lower capacity leading to limited availability of sponge in the domestic market. Pellet sponge iron prices Thursday rose by around Rs500/mt to Rs16,000-16,100/mt ex-works Raipur from the prior week. 


Among the reasons supporting sponge iron price is the fact that amid diminished domestic demand Indian iron and steelmakers are exporting pellets and billets to China and other countries. Godawari Power and Ispat, one of the integrated steel producers in Central India, is active in exporting pellets, mainly to China, in the last two months. The pellet prices in the export market are around $115-120/mt fob India.


Pellets are made from iron ore and used to make sponge iron which is further converted into semis-finished products like billet/ bloom and then finished long products including rebar, structures and wire rod. Depending on their spreads, steelmakers in India opt for either ferrous scrap or sponge iron to feed their furnaces. The spread between billet and rebars have contracted in June, as analysed by Davis Index.



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