India: Iron ore concentrate prices stable, market eyes OMC iron ore auction results

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

OMC has scheduled an auction for 2.5 million tonnes (mnt) of iron ore (1.8 mnt of fines and 0.5 mnt of lumps) on 16 June, 2023. The miner has reduced the base price for fines by up to INR 1,150/tonne (t). However, the lumps base price has been increased by up to INR 200/t compared to the auction held on 15 May, 2023.

"Market participants have adopted a wait-and-watch mode due to the upcoming OMC's iron ore auction," said a Jabalpur-based seller.

SteelMint's index for Fe 63% concentrate currently stands at INR 4,500/t exw, stable as against the last assessment on 10 June, 2023. Some offers were also heard at a higher level of INR 4,750-4,850/t exw. However, some buyer's bid price idea was heard at around INR 4,050/t exw.

Rationale:

• Four (4) deals of around 110,000 t were heard concluded at INR 4,500-4,750/t exw and were taken into consideration as T1 trade for index calculation and were given 50% weightage.
  
  
• Three (3) offers and indicative prices were reported out of which only one (1) was taken into consideration as T2 trade and accorded the balance 50% weightage.
  
  

Factors supporting iron ore concentrate prices-

• Pellet prices edge up: SteelMint's bi-weekly domestic pellet (Fe 63%) index, PELLEX, inched up by INR 50/t to INR 9,100/t DAP Raipur on 13 June, 2023 as compared to the last assessment on 9 June. Raipur-based pellet makers kept their offers stable at INR 8,900-9,100/t exw. Meanwhile, not many pellet deals were heard in the local Raipur market this week.
  
  
• Odisha iron ore fines prices stable: SteelMint's weekly Odisha iron ore fines (Fe 62%) index remained stable at INR 5,500/t ex-mines on 10 June, 2023 compared to the last assessment on 3 June. Trade activities for Fe 62% fines were limited; however, deals for Fe 57-60% grades were actively concluded this week. Limited iron ore trade over the past month on falling pellet and sponge prices had lowered inventories at plants. Thus, market players turned active this week.
  
  

Outlook

With expectations of a fall in bids, iron ore concentrate prices may come under pressure. Also, OMC iron ore auction results could become a deciding factor.