January 25, 2012: The domestic sponge prices witnessed a mixed trend in January. Initially the market witnessed some strength on supply shortage and soaring prices of raw materials. However, apprehension amidst the buyers on uncertainties in the market, pulled the sentiments down.

Given the fact that the domestic sponge iron industry is facing one of the worst times owing to issues like unavailability and rising cost of raw materials, most manufacturers were forced to keep their plants shut.

The domestic sponge iron industry is not even operating at half the capacity at present, and many units have lowered production by up to 60% mainly due to iron ore shortage.

Sponge iron prices across the country noticed its first slide after witnessing a long price rally towards the end of the second week of January as the prices were found to soften by Rs 200-300/ton across India. Sponge iron prices in Raipur was quoted around Rs 23,800/ton.

However, the market is expected to remain more or less steady in the near future with the factors like higher iron ore prices, new pricing policy by Coal India, which will make coal prices dearer by about 25%.

Moreover, the shortage of iron ore and high coal prices, prompt the sponge iron manufacturers to hold their prices now and hence the market is expected to remain steady.

Source: ISMW