India: BigMint's Odisha iron ore fines index falls by INR 150/t ($2)

• OMC cuts base prices by up to INR 400/t ($4) m-o-m for upcoming auction
  
  
• Limited trades reported ahead of auctions
  
  
• CNY holidays limit export trades
  
  

BigMint's weekly Odisha iron ore fines (Fe 62%) index decreased by INR 150/t ($1.8) w-o-w to INR 5,650/t ($68) ex-mines on 17 February 2024. No deal was recorded for Fe 62% grade in this publishing window.

Iron ore prices in Odisha remained downward throughout the week, as a few miners offered ore in the merchant market. No major bookings of iron ore fines were witnessed this week amid non-availability for higher grade fines as major private miners exhausted the EC limit for financial year 2024 (FY'24). However, few lower-grade deals were heard in the domestic market.

An Odisha-based merchant miner said, "We are offering only lower grade material in the fines as no stock available of higher grade fines. Recently heard that OMC dropped the base prices for the coming auction. However, we haven't changed the offer yet and waiting for the result of bids in the auction. Only one or two mines had a stock of high-grade fines with a limited available quantity of material. We already sold the high-grade iron ore and currently clearing the low-grade stock as the financial year coming to an end."

Odisha Mining Corporation (OMC) has scheduled an auction for 2.79 mnt of iron ore ( 1.546 mnt of fines and 1.243 mnt of lumps) on 19 February, 2024. They have reduced the base prices m-o-m by INR 300-400/t and INR 50/t for the majority of fines and lumps lots, respectively. The fallen pellet and sponge iron prices forced miners to cut offers for the auction.

Buyers in the market are waiting for the OMC auction to book new material while participants have uncertainty for auction.

A buyer commented: "Bids may remain lower in the OMC auction to settle the market. Fall in pellet and sponge iron prices have weighed on Odisha iron ore prices."

A key pellet producer claimed: "Production costs increased in the operation of raw pellet-making as iron ore prices were on the higher side in the last few months. The iron ore buyer may avoid the aggressive booking in the OMC auction amid low demand."

Notably, BigMint's India pellet (Fe 63%, 3% Al) export (FOB east coast) index remained stable w-o-w at $115/t on 14 February 2024. The pellet export market has experienced a prolonged period of muted activity, with buyers absent due to the China Lunar holidays observed from 10-18 February. Buyers are on the sidelines during the holidays, which has kept the market sluggish.

Rationale:

• T1- No deal was taken from Odisha in this publishing window under price computation. It was given 0% weightage for index calculation.
  
  
• T2- BigMint received fourteen (14) offers and indicative prices under T2 trade deals in this publishing window. Thirteen (13) were taken into consideration and given 100% weightage. To check BigMint's iron ore assessment, pricing methodology, and specification document Click here.
  
  

Factors driving prices

• Pellet prices drop in Barbil: Pellet (6-20 mm, Fe 63%) prices in Odisha's Barbil decreased marginally by around INR 100/t w-o-w. The current assessment stands at INR 8,600/t loaded to wagon. However, pellet (Fe 63%, 6-20 mm) prices in Durgapur dropped by INR 300/t w-o-w to INR 9,350/t exw on 16 February.
  
  
• Export demand lull: BigMint's weekly Indian low-grade iron ore fines (Fe 57%) export index remained stable w-o-w at $83/t FOB east coast on 15 February. No deals were recorded from India for low-grade fines export amid the absence of buyers. The seaborne market for Indian iron ore fines remained poor amid the Chinese New Year (CNY) holidays due to which buyers and steelmakers remained away from the market. There was no demand witnessed in the seaborne market.
  
  
• Sponge iron prices up in Rourkela: BigMint's assessment for sponge iron C-DRI (FeM 80%) prices in Rourkela increased by INR 200/t w-o-w to INR 26,400/t exw on 17 February compared to last week. Similarly, steel billet (100*100 mm) prices in Rourkela inched up by INR 100/t w-o-w to INR 38,300/t today.
  
  

Outlook

Iron ore prices in Odisha are likely to be clearer after the OMC auction scheduled next week on Monday. Prices will depend on how buyers are responding in the auction.