August 22, 2008

Indian sponge iron makers hike prices amid tight supply conditions

BS reported that Indian sponge iron producers have increased prices for the second time within a fortnight by INR 400 or 3% to INR 14,200 a tonne following a shortage of raw materials and a rising demand from domestic steel mills. In the first increase in September 2007, domestic sponge iron manufacturers raised prices by INR 300 a tonne as a result of a scarcity in raw materials.

Mr Amitabh Mudgal vice president marketing and corporate affairs of Monnet Ispat said that “Supply is very tight as sponge iron producers are utilizing only 70% to 80% of the capacity on non availability of iron ore, the only raw material. The demand for sponge iron also rose because of a tight supply of shredded scrap."

An industry source added that iron ore stocks at mines were lying in abundance but admitted that problems in transporting them had caused a scarcity in the mineral. He added that “There are no rakes available. Though the mining activity is not subdued, supplies have been affected badly because of transportation.” In the last fortnight, the transportation cost has gone up by INR 200 a tonne in the domestic market.

Prices of iron ore too are moving up and have reached the highest levels of USD 150 CIF Chinese port putting pressure on domestic prices.

International prices of shredded scrap and HMS have also surged during the last fortnight.