Indian sponge manufactures have shut their operations amid the national lockdown announced by the central and state governments until mid-April to combat the spread of COVID-19. These companies will resume operations only after the situation normalises in the country. Production halts by large manufacturers in central India like Godawari power & Ispat and Sarda Energy & Minerals is likely to impact domestic availability of sponge iron. Additionally, mills are likely to face hiccups in resumption of production with a shortage of coal from South Africa, which too remains under a lockdown until April 16. Sponge iron makers prefer South African coal for its quality.
Sponge iron also known as Direct Reduced Iron (DRI) is processed into ingots or billet with Induction Furnace or Electric Arc Furnace. India is one of the world’s largest producers of sponge iron with an installed capacity of around 47mn mt. India’s sponge production in the April 2019- Feb 20 period was 35.53mn mt, up by 8.9pc from the prior-year period as per the steel ministry’s data.
At present, no capacity expansion projects are in the pipeline for over a year due to environmental norms concerning air pollution.