India: Iron ore concentrate prices edge up, market awaits OMC iron ore auction results

Iron ore concentrate prices in Jabalpur, central India, witnessed a marginal increase this week. Meanwhile, market participants are eagerly waiting for Odisha Mining Corporation's (OMC's) iron ore auction this month for better price clarity.

"Iron ore concentrate offers have increased by INR 200/t following the recent hike in offers by pellet makers," said a Jabalpur-based seller.

SteelMint's index for Fe 63% concentrate currently stands at INR 3,900/t exw, an increase of INR 100/t as against the last assessment on 12 August, 2023. Some offers were also heard at a higher level of INR 4,000/t exw. However, some buyers' bid price idea remained unchanged at INR 3,600-3,800/t exw.

OMC has scheduled an auction for 3 million tonnes (mnt) of iron ore (2.4 mnt of fines and 0.6 mnt of lumps) on 18 August 2023. The miner has kept iron ore fines base prices stable against its July auction. However, the base price for lumps has been increased by INR 900/tonne (t) compared to the auction held on 20 July 2023.

Rationale:

• Two (2) 44,000 t deals were heard closed at INR 4,000/t exw and were considered as T1 trades for index calculation and given 50% weightage.
  
  
• Seven (7) offers and indicative prices were reported, with seven (7) of them being considered as T2 trades and receiving 50% weightage.
  
  

Factors supporting prices:

• Hike in pellet prices: SteelMint's bi-weekly domestic pellet (Fe63%) index, PELLEX, increased by INR 100/t to INR 9,150/t DAP Raipur on 14 August 2023 as compared to the last assessment on 11 August. The index increased due to hike in pellet offers recently by manufacturers. As per sources, owing to lack of inventory an issue of dispatches occurred with the pellet makers resulting in the price hike.
  
  
• Stability in Odisha iron ore prices: SteelMint's weekly Odisha iron ore fines (Fe 62%) index remained stable at INR 4,200/t ex-mines on 12 August, 2023 compared to the last assessment on 5 August. Market participants are waiting for OMC's iron ore auction. However, decent bookings have been done at the prevailing offers in the market.
  
  

Outlook

The iron ore concentrate market remained unsettled this week, with buyers anticipating a further reduction in offers. At the same time, sellers anticipate an upward price correction due to supporting pellet prices. However, market participants are waiting for OMC's iron ore auction results which may lead to price clarity in the coming days.