BigMint: Odisha iron ore fines index rises INR 300/t ($4/t) w-o-w amid hike in offers

• Sponge, billet prices sharply climb up w-o-w
  
  
• Pellet offers surge on rising global fines prices
  
  

Iron ore prices in the Odisha region increased sharply this week due to a rise in offers from merchant miners and a drop in dispatches due to extended monsoons. Prices were supported by pellet, sponge, and finished steel market dynamics, as all steel segments improved in the last couple of days. The sudden spike in the global fines index before the Chinese Golden Week holidays also impacted iron ore prices in Odisha.

BigMint's Odisha iron ore fines (Fe 62%) index increased by INR 300/tonne (t) ($4/t) w-o-w to INR 4,800/t ($57/t) ex-mines as of 5 October. Deals of around 24,000 t of fines (Fe62%) were concluded this week, though certain sellers limited offers in the absence of higher-grade fines. Odisha miners closed deals of around 200,000 t of iron ore (fines and lumps) this week at the revised prices.

An Odisha-based miner said, "We recently increased the offers for iron ore by INR 400-700/t and have already made some deals. There has been some interest in the new offers because of an increase in demand in downstream steel segments. The recent rise in pellet tags and a price hike by the National Mineral Development Corporation (NMDC) have motivated Odisha miners to raise their offers. It will be interesting to see how the market responds to these offers, especially with the upcoming activity from participants in the seaborne market after the Chinese holidays."

Some sources noted that domestic steelmakers are uncertain about current iron ore prices and, as a result, are hesitant to buy the material. The sustainability of iron ore exports and domestic steel prices are remained uncertain owing to on going Chinese holidays. Therefore, market participants are mostly concern post holidays market movement.

A steelmaker explained that the increase in prices has not been accepted by the market yet. Buyers are currently in a wait-and-watch mode, and purchases are being made only on an as-needed basis in the region. Pellet producers are waiting for new purchases to obtain a clearer understanding of market sentiments. However, price support from sponge and finished steel tags may lead to increased trading activity in the raw material space in the upcoming days.

Rationale

• T1 - Two (2) deals of Fe 62% fines were recorded in the publishing window. Both were not considered for price computation and were given a 0% weightage for index calculation.
  
  
• T2 - BigMint received twenty-two (22) offers and indicative prices under T2 offers, indicative, and bids in this publishing window. Thirteen (13) were taken into consideration and given a 100% weightage. To check BigMint's iron ore assessment, pricing methodology, and specification document, click here.
  
  

Market highlights

• Pellet prices rise: Pellet prices in the domestic and seaborne markets rose sharply this week, following supportive market sentiments and a surge in global fines prices. Pellet (6-20 mm, Fe 62.5%) prices in Odisha's Barbil rose INR 650/t ($8/t) w-o-w to INR 8,150/t ($97/t) loaded to wagon. Pellet (Fe 62.5%, 6-20 mm) prices in Durgapur increased by INR 550/t ($7/t) w-o-w to INR 9,100/t ($108/t) exw on 4 October. BigMint's India pellet (Fe 63%, 3% Al) export index (FOB east coast) climbed up by a marked $6/t w-o-w to $101.5/t on 4 October.
  
  
• Fines export prices increase: BigMint's weekly Indian low-grade iron ore fines (Fe 57%) export index increased by $6.5/t w-o-w to $67/t FOB east coast on 3 October. Deals of around 110,000 t of Fe 57% fines were recorded in India at $80-85/t CFR China. The discount for lower-grade fines was 19% on the global fines index, stable compared to last week.
  
  
• Sponge iron prices surge: BigMint's assessment of sponge iron C-DRI (FeM 80%) prices in Rourkela increased by INR 1,600/t ($19/t) w-o-w to INR 29,500/t ($351/t) on 5 October. Meanwhile, steel billet (100*100 mm) offers in Rourkela increased by INR 1,700/t ($20/t) w-o-w to INR 40,600/t ($483/t) today.
  
  

Outlook

Iron ore prices in the Odisha region are expected to remain supported in the coming week, as per BigMint's analysis. Deal momentum may move northward ahead of OMC's auction. It is important to note that, this week, some merchant miners were focused on completing their previous sales and did not open their offers this week. Though post Chinese holidays market movement will be the major concern.