India: Iron ore concentrate offers hit 8-month high on pending deliveries, higher pellet offers

• Hike in pellet offers continues to support prices
  
  
• Buyers hesitant to book at current offers
  
  
• Falling sponge prices could become a matter of concern
  
  

Iron ore concentrate prices in Jabalpur, central India, witnessed an increase this week amid favourable sentiments from pellet and Odisha iron ore markets.

Although offers have witnessed an increase of around INR 250-350/t ($3-4/t) to INR 5,400-5,600/t exw, no active bookings have been heard yet. Meanwhile, few buyers are still hesitant to book at current offers amidst pending deliveries of old orders.

"Increase in offers is supported by hike in pellet offers and active response in OMC's recent fines auction. However, we are yet to close deals at current quoted offers," mentioned a Jabalpur-based seller.

"Currently, we are overbooked. Although we have placed enquiry but as per sellers the deliveries which usually takes 2-3 days by rakes might get delayed owing to New Year holidays in between," a buyer told SteelMint.

SteelMint's bi-weekly index for Fe 63% concentrate currently stands at INR 5,300/t ($64/t) exw, up by INR 50/t ($1/t) as against the prices seen on 23 December, 2023. The index has risen to 8-month high, as per data maintained with SteelMint.

Rationale:

• One (1) trade of 38,500 t was recorded in this publishing window and was accorded with 50% weightage.
  
  
• Seven (7) offers and indicative prices were reported, out of which six (6) were taken into consideration as T2 trades, receiving 50% weightage.
  
  

Why concentrate offers have increased?

• Hike in pellet offers: Godawari Power raised pellet (Fe 63.5%) offers by INR 300/t ($4/t) to INR 10,600/t ($127/t) w.e.f 26 December, 2023 while prices of high-grade pellets (Fe 66%) remained stable at INR 12,300/t ($148/t) exw-Raipur. Meanwhile, other pellet-makers' offers in Raipur remained stable at INR 10,200/t ($122/t) exw. Pellet offers increased sharply over the last two weeks amid increased iron ore prices, SteelMint observed. Pellet-makers hiked offers amid increased production costs and supported by pellet exports. SteelMint's bi-weekly domestic pellet (Fe 63%) index, PELLEX, remained stable at INR 10,200/t ($122/t) DAP Raipur on 26 December, 2023 compared to the last assessment on 22 December.
  
  
• Odisha iron ore fines prices rise post-OMC auction: SteelMint's weekly Odisha iron ore fines (Fe 62%) index increased by INR 400/t ($5/t) to INR 5,500/t ($66/t) ex-mines on 23 December, 2023. Active response in OMC's auction and low-grade iron ore export deals have kept prices supported. However, a few merchant miners are holding offers and may declare in the next couple of days.
  
  

Outlook

Iron ore concentrate offers are expected to remain supported in the near term owing to supportive sentiments from pellet and Odisha iron ore market. However, drop in sponge iron (PDRI) prices is to watch out for.