India: Bids jump up by over INR 1,000/t ($12/t) in OMC's iron ore fines auction as lower supply drives competition

• Miner lowers offered quantity by 20% m-o-m in Oct
  
  
• Global iron ore prices increase over $10/t m-o-m
  
  

India's 2nd-largest merchant miner, Odisha Mining Corporation (OMC), conducted an auction for 1.98 mnt ore on 18 October. The base prices for both fines and lumps have been increased by INR 850-1,800/t m-o-m. This hike follows rising iron ore and pellet prices, coupled with a reduction in dispatches from Odisha, driving the miner to adjust its base prices

Out of 1.06 mnt of iron ore fines (Fe 54-65%) offered on 18 October, the entire quantity was booked at INR 3,150-5,800/t. Bids (weighted average) increased around INR 1,250/t against last month. Bids have increased in the range of INR 150-1,150/t against the base price for the fines lots.

Why did the OMC auction fetch premium bids?

• Slowdown in Odisha iron ore dispatches: The disruption in iron ore dispatches from Odisha due to an extended monsoon can indeed have a significant impact on the market, influencing the high bids in OMC's auctions. Dispatches from Odisha have come down to 12 mnt in September, lowest since August, as per provisional data available with BigMint. However, in H1 FY'25 dispatches have risen by 13% y-o-y.
  
  
• OMC lowers offer quantity in Oct auction: There was a decrease in OMC's auction quantity this month by 20%, compared to the previous month. This imbalance between limited supply and increasing demand is causing more competitive bidding in OMC's auctions, leading to higher premiums. The state miner reduced its iron ore volume by around 500,000 t in the October auction compared to its past few months' auctions.
  
  
• Global iron ore prices rise m-o-m: Iron ore fines (Fe 62%) spot prices significantly increased by $12/t m-o-m to $105/t CFR China taken till 17 October, on monthly average basis. The price increased in the seaborne market due to a surge in restocking activity during the Golden Week holidays. However, prices remained under pressure after the holidays as Chinese stimulus has yet not impacted the market fundamentals.
  
  

Outlook for Odisha iron ore prices

It is likely that other merchant miners in Odisha will also lift offers post-OMC auction. The majority of eastern India-based pellet players had withdrawn offers awaiting the auction outcome. It is likely that pellet offers may also strengthen.