India: BigMint's Odisha iron ore fines index stable even as market awaits OMC auction
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- Export market subdued amid CNY holidays
- Market awaits OMC auction
- Lack of price clarity amid wide gap in offers
BigMint's weekly Odisha iron ore fines (Fe 62%) index remained stable w-o-w at INR 5,800/t ex-mines on 10 February 2024. No deal was recorded for grade Fe 62% in this publishing window.
Iron ore prices in Odisha remained volatile 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 limited material availability.
An Odisha-based merchant miner said, "We are clearing the stock of previous bookings as our EC for FY'24 is almost exhausted. There is a persisting issue around availability of high-grade ore in the Odisha market. However, buyers also remained sidelined amid a drop in pellet prices over the last few days. We struck a few deals last month and currently clearing stocks."
A market watcher said, "The market faces a lack of clarity about prices as miners have a wide gap in their offers. Most of the iron ore market players are waiting for this month's OMC auction."
Market activity has slowed down amid unpredictable sentiments in Odisha as pellets, sponge iron, and finished steel prices were on a downtrend, while iron ore prices were a tad higher amid tight availability.
A key pellet-maker claimed that a few plants may take a temporary shutdown in the coming days owing to slowdown in sponge iron and billet prices. Iron ore fines prices were still higher which have increased production cost while, on the other hand, low domestic demand and sluggish overseas markets weighed on pellet prices.
The market is waiting for OMC's auction for price clarity. A few market participants are expecting that OMC may increase base prices for February's auction in view of the current market scenario.
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 thirteen (16) offers and indicative prices under T2 trade deals in this publishing window. Eleven (11) 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 decline in Barbil:Pellet (6-20 mm, Fe 63%) prices in Odisha's Barbil decreased marginally by around INR 400/t w-o-w. The current assessment stands at INR 8,700/t loaded to wagon. However, pellet (Fe 63%, 6-20 mm) prices in Durgapur inched down by INR 100/t w-o-w to INR 9,650/t exw on 9 February.
- Export prices drop:BigMint's weekly Indian low-grade iron ore fines (Fe 57%) export index decreased by $3/tonne (t) w-o-w to $83/t FOB east coast on 8 February 2024. A deal of 55,000 t Fe 56/57% fines was heard at $87/t FOB India towards the end of last week. The seaborne Indian low-grade fines market remained sluggish this week as the majority of participants were away for the Lunar New Year holidays. No trading activity was witnessed during the week while sellers also kept their offers on hold.
- Sponge iron prices fall in Rourkela: BigMint's assessment for sponge iron C-DRI (FeM 80%) prices in Rourkela dropped by INR 300/t w-o-w to INR 26,150/t exw on 10 February compared to last week. Similarly, steel billet (100*100 mm) prices in Rourkela inched down by INR 300/t w-o-w to INR 38,200/t today.
Outlook
Iron ore prices in Odisha are likely to remain volatile in the coming days following negative market sentiments. However, the market will get price clarity next week following OMC's auction.
