India: Iron ore concentrate prices remain stable following NMDC's price hike

• NMDC announces second iron ore price hike in Oct'24
  
  
• Trade activity takes place at higher offers
  
  

This week, iron ore concentrate offers in Jabalpur, central India, remained stable, influenced by a price hike by the National Mineral Development Corporation (NMDC). Active trading at higher offers and positive sentiments from the pellet and Odisha iron ore markets also contributed to this stability, sources informed BigMint.

BigMint's bi-weekly iron ore concentrate index stood at INR 4,700/tonne (t) ($56/t) exw-Jabalpur, stable from the previous assessment on 19 October 2024. While some offers were noted at INR 5,000/t ($59/t) exw, no transactions were officially confirmed at that price.

"Offers remain the same as they were already increased after the hike by the Odisha Mining Corporation (OMC)," a Jabalpur-based seller said.

Rationale

• Two (2) trades of 24,000 t were recorded in this publishing window and were considered under T1 trade. These were accorded 50% weightage.
  
  
• Eight (8) offers and indicative prices were reported, and six (6) were taken into consideration as T2 trades. These received 50% weightage.
  
  

Factors driving concentrate prices

• NMDC hikes iron ore prices for Oct'24 deliveries: India's largest merchant iron ore mining company, NMDC, increased list prices of calibrated lump ore (CLO) and fines today by INR 700/t ($8/t) and INR 400/t ($5/t), respectively, BigMint learnt from sources. The company's prices are effective from 23 October 2024. The miner has fixed prices of DR CLO (10-40 mm, Fe 67%) at INR 7,420/t ($88/t) and fines (-10 mm, Fe 64%) at INR 5,410/t ($64/t) on FOR basis from its Bacheli complex. Prices include royalty, DMF, and NMET charges. Notably, this is the second hike announced by NMDC in October 2024, as prior to this, the miner had lifted offers by up to INR 400/t on 01 October 2024.
  
  
• Odisha iron ore fines index rises w-o-w post-OMC auction: BigMint's Odisha iron ore fines (Fe 62%) index increased by INR 600/t ($7/t) w-o-w to INR 5,600/t ($67/t) ex-mines on 19 October 2024. The iron ore market in Odisha experienced a significant price rise due to a combination of factors. These include a previous increase in auction base prices by OMC and increased bidding by steelmakers in the auction. This upward trend is expected to continue, with private miners planning to raise prices by INR 500-700/t ($7-8/t) in the coming week.
  
  
• Pellet prices rise by INR 500/t amid hike in offers: Pellet prices in central and eastern India surged following the latest OMC iron ore auction, where m-o-m premiums exceeded INR 1,000/t ($12/t), significantly increasing the manufacturing costs of pellets. In response, major pellet plants in Odisha raised their offers by INR 500-700/t ($7-8/t), while Raipur witnessed a similar increase of INR 500/t ($7/t). BigMint's bi-weekly domestic pellet (Fe 63%) index increased by INR 500/t ($7/t) to INR 10,500/t ($125/t) DAP Raipur on 22 October compared to the previous assessment on 18 October.
  
  

Key market update

• Weakening sponge iron market: Sponge iron (PDRI) prices in Raipur decreased sharply by INR 1,550/t ($18/t) w-o-w on 23 October 2024, impacted by sluggish movements in the semi-finished and finished steel segments, which led to further reductions in offers. The downtrend in steel could potentially exert downward pressure on iron ore concentrate prices and has raised concerns among market participants.
  
  

Outlook

Iron ore concentrate offers are expected to remain stable, supported by positive sentiments in the iron ore and pellet markets. However, the weakening sentiment in downstream markets raises concerns.