India: Iron ore concentrate prices drop INR 350/t after NMDC's price cut

Iron ore concentrate prices in Jabalpur, central India, declined this week. Weak fundamentals in pellet and Odisha's iron ore market, as well as NMDC's recent reduction in iron ore prices dragged down concentrate offers.

Meanwhile, buyers are expecting a further drop in offers owing to the current market situation. SteelMint's index for Fe 63% concentrate prices stands at around INR 4,700/tonne (t) exw, down INR 350/t, w-o-w. The index is hovering at a four-month low level, as per data maintained with SteelMint.

Rationale:

• One (1) deal for 60,000 t was heard concluded at INR 4,600/t exw which was taken into consideration as T1 trade for index calculation and given 50% weightage.
  
  
• Four (4) offers and indicative prices were reported out of which three (3) were taken into consideration as T2 trade and accorded the balance 50% weightage.
  
  

Factors weighing on iron ore concentrate prices:

• NMDC cuts iron ore prices up to INR 450/t: NMDC, Chhattisgarh, has decreased the list prices of iron ore recently. The company has cut prices of DR-CLO by INR 300/t and fines by INR 450/t, effective from 30 May, 2023. NMDC fixed prices for DR CLO (Fe 67%, 10-40mm) at INR 5,220/t and iron ore fines (64% - 10mm) at INR 3,560/t (FOR prices from Bacheli complex, excluding royalty, DMF and NMET).
  
  
• Pellet prices remain unchanged, bids fall: SteelMint's bi-weekly domestic pellet (Fe 63%) index, PELLEX, remained stable at INR 9,150/t DAP Raipur on 30 May compared to the previous assessment on 26 May. Buyers booked pellets on as-needed basis and are currently in a wait-and-watch mode. However, most of them are expecting a drop in Raipur pellet offers in the near term given the price reduction announced by NMDC.
  
  
• Odisha iron ore prices stable, likely to fall: SteelMint's weekly Odisha iron ore fines (Fe 62%) index remained stable at INR 5,400/t ex-mines on 27 May compared to the last assessment on 20 May. As pellet and sponge iron prices in the region are on a downtrend, buyers are expecting a price cut from miners. On the other hand, high-grade material availability is also a matter of concern for buyers. The iron ore export market is under pressure amid a sharp dip in global iron ore prices.
  
  

Outlook

With bearish sentiments prevailing in the pellet and iron ore markets, iron ore concentrate prices may come under increasing pressure.