India: Iron ore concentrate prices drop to nearly 7-month lows amid bearish sentiments

Iron ore concentrate prices in Jabalpur, central India, decreased w-o-w due to bearish factors such as the drop in Odisha Mining Corporation's (OMC's) base price for the upcoming iron ore auction and fall in Odisha iron ore and pellet prices.

Meanwhile, market participants are eagerly waiting for OMC's upcoming iron ore auction to get better price clarity.

"We are waiting for OMC auction results to get clarity on prices for our future trade. On the other hand, buyers' are expecting more discounts," said a Jabalpur-based seller.

SteelMint's index for Fe 63% concentrate currently stands at INR 3,800/tonne (t) exw, down by INR 100/t w-o-w. The index has fallen to nearly seven months' low, as these levels were last seen in end-December 2022, as per data maintained with us.

Rationale:

• Two (2) deals of around 50,500 t were heard concluded at INR 3,800/t exw and were taken into consideration as T1 trade for index calculation and given 50% weightage.
  
  
• Seven (7) offers and indicative prices were reported out of which four (4) were taken into consideration as T2 trade and accorded the 50% weightage.
  
  

Factors weighing on iron ore concentrate prices-

• NMDC's price revision for July dispatches: India's largest merchant iron ore mining company, NMDC, has decreased list prices of iron ore by INR 200-300/t on 18 July, 2023. Fixed prices of DR CLO (10-40mm, Fe 67%) are at INR 6,270/t and those of iron ore fines (-10mm, Fe 64%) are at INR 4,210/t (on FoR basis from Bacheli complex). Prices include royalty, DMF and NMET charges.
  
  
• OMC's base price reduction: OMC has scheduled an auction for 3.01 million tonnes (mnt) of iron ore - 2.15 mnt of fines and 0.86 mnt of lumps - on 20 July, 2023. The miner reduced the base price for fines by up to INR 750/t and that of lumps by INR 1,400-1,800/t compared to the auction held on 16 June.
  
  
• Odisha iron ore prices fall w-o-w: SteelMint's weekly Odisha iron ore fines (Fe 62%) index decreased by INR 100/t to INR 4,700/t ex-mines on 15 July, 2023 compared to the last assessment on 8 July. The absence of active trade kept fines prices under pressure this week. Due to the monsoon, iron ore production and logistic issues continue to impact purchase decisions.
  
  
• Pellet prices inch down w-o-w: SteelMint's bi-weekly domestic pellet (Fe 63%) index, PELLEX, decreased marginally by INR 50/t w-o-w to INR 8,950/t DAP Raipur on 18 July, 2023 as compared to the last assessment on 14 July. Most of the buyers have restocked raw materials before monsoon and have enough of it. Therefore, they are in a wait-and-watch mode and closely looking at the market situation for any favourable conditions.
  
  

Outlook

Iron ore concentrate prices might remain under pressure amid buyers' expectations of further discounts in prices. However, OMC's upcoming iron ore auction will emerge as the deciding factor for the future price trend.