India: Iron ore concentrate prices inch down in recent deal

• Fines bid prices fall in OMC's auction
  
  
• Pellet, iron ore market sentiments weaken
  
  
• Onset of monsoon to put pressure on production volumes
  
  

Iron ore concentrate prices in Jabalpur, central India, witnessed a drop this week. Fall in bids in Odisha Mining Corporation's (OMC's) iron ore fines auction along with prevailing bearish sentiments in pellet and Odisha iron ore market continued to weigh on concentrate market, BigMint noted.

BigMint's weekly iron ore concentrate index stood at around INR 4,700/t ($56/t) exw, a decrease of INR 50/t ($1/t) as against the last assessment on 22 June. However, buyers' bids were heard at lower levels of INR 4,700/t loaded to wagons.

"We are quite firm at our previous offers. Also, production has started to come down amid monsoon supporting prices," said a Jabalpur-based seller.

Rationale:

• Two (2) trades of 35,000 t were recorded in this publishing window, and were considered under T1 trade and was accorded with a 50% weightage.
  
  
• Nine (9) offers and indicative prices were reported, out of which eight (8) were taken into consideration as T2 trades, receiving 50% weightage.
  
  

Why are concentrate prices under pressure?

• Bids drop m-o-m in OMC's fines auction: In OMC's auction for 1.79 mnt of iron ore fines (Fe 54-65%) on 20 June, 2024, around 1.68 mnt (94%) was booked at INR 2,570-5,750/t ($31-69) ex-mines. Bids decreased around INR 800-1,200/t ($10-14/t) for the majority of fines lots against last month owing to a drop in pellet and sponge iron prices. Notably, the miner had reduced the base prices m-o-m in the range of INR 250-300/t ($3-4/t) for June's auction.
  
  
• Pellet prices drop to over 2-month low: BigMint's bi-weekly domestic pellet (Fe 63%) index dropped by INR 50/t ($1/t) to INR 9,800/t ($117/t) DAP Raipur on 25 June, 2024 compared to the last assessment on 21 June. The index hit two and a half month low as similar levels were last seen in mid-April, 2024, as per data maintained with BigMint. Pellet prices dropped in the Raipur region as local plants decreased their offers and landed offers from Jharsuguda also fell post-OMC auction amid weak demand. Meanwhile, the buyers remained cautious as sponge iron (PDRI) prices continuously decreased and hit a three-year low.
  
  
• Odisha iron ore fines prices fall to 1-month low: BigMint's Odisha iron ore fines (Fe 62%) index dropped by INR 500/t ($6/t) w-o-w to INR 4,800/t ($57/t) ex-mines on 22 June, 2024. Iron ore prices in the Odisha region fell sharply post-OMC auction as bids declined for both lumps and fines compared to the last month. Meanwhile, the continuous downtrend in the domestic pellet, sponge and finished steel prices along with pressure from the export market weighed down the bids prices in Odisha's OMC auction. Although buyers participated actively but didn't put the bids aggressively.
  
  

Outlook

Iron ore concentrate offers are expected to exhibit volatility in the near term amid fluctuation in pellet and Odisha iron ore prices. Meanwhile, demand for concentrates is going to slow down amid monsoon.