India: Iron ore concentrate prices stable, offers may be revised post-OMC 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's) iron ore auction scheduled today for better price clarity.

SteelMint's bi-weekly index for Fe 63% concentrate currently stands at INR 4,500/tonne (t) exw, stable as against the last assessment on 14 October, 2023.

"Weak sentiments in the pellet and Odisha iron ore market have weighed on iron ore concentrate offers. In the meantime, response in OMC's today's iron ore auction will give a clarity", mentioned a Jabalpur-based seller.

"Drop in domestic pellet offers by key players and the recent base price cut by OMC might pull down offers. However, monsoons have retreated from the region, putting an end to the shortage of raw material as mining has restarted which might support concentrate offers," another source from Jabalpur mentioned.

OMC has scheduled an auction for 3.046 million tonnes (mnt) of iron ore (2.159 mnt of fines and 0.887 mnt of lumps) today. The miner decreased iron ore fines base prices by INR 100/t and lumps by INR 1,700/t compared to the auction held on 18 September. Lower finished steel sales and decreased pellet offers forced the miner to drop base prices, sources informed.

Rationale:

• Two (2) trades were recorded in this publishing window, out of which one was taken into consideration and given 50% weightage.
  
  
• Nine (9) offers and indicative prices were reported, with seven (7) of them being considered as T2 trades and receiving 50% weightage.
  
  

Factors weighing on prices:

• Odisha iron ore fines prices fall w-o-w: SteelMint's weekly Odisha iron ore fines (Fe 62%) index decreased by INR 100/t w-o-w to INR 5,000/t ex-mines on 14 October, 2023 compared to the last assessment on 7 October. Miners are currently offering lower-grade material due to less availability of medium higher-grade fines. As per sources, miners have limited quantity of medium and higher-grade fines as they are facing difficulties in mining operations. However, most of the buyers remained silent and waited for clear market direction.
  
  
• Bid-offer disparity prevails in pellet market: SteelMint's bi-weekly domestic pellet (Fe 63%) index, PELLEX, remained unchanged at INR 10,000/t DAP Raipur on 17 October, 2023 compared to the last assessment on 13 October. A big gap was seen between bids and offers amid slow market activity. Market activity was comparatively slow amid the festive season and some buyers booked raw pellets on a need basis. Some buyers were approaching the eastern region to get material at lower offers. According to some buyers, current pellet offers are not tenable as sponge and steel prices are decreasing sharply amid some central sponge makers selling material at lower offers in the local Raipur market.
  
  

Outlook

Iron ore concentrate prices are expected to remain volatile in the near term owing to weak pellet and Odisha iron ore market sentiments. Market participants are waiting for OMC's iron ore auction results which may lead to price clarity.