India: Iron ore concentrate prices stay firm, outlook subdued

• Market awaits NMDC price revision
  
  
• Buyers expect drop in offers post-fall in OMC bids
  
  

Iron ore concentrate prices in Jabalpur, central India, continued to remain stable this week. Active response to the recent NMDC and OMC iron ore auctions along with active deals closed at current offers have kept concentrate prices supported, BigMint noted.

"Currently, we have not planned to reduce offers as we are receiving active enquiries at current levels", informed a Jabalpur-based seller.

BigMint's bi-weekly index for Fe 63% concentrate currently stand at INR 5,700/t ($69/t) exw, stable as against the last assessment on 17 February, 2024. Also, some players were seen not offering in the market this week.

"Iron ore concentrate prices should fall post-OMC's iron ore auctions and drop in pellet export prices," a buyer observed to BigMint.

"Buyers' side is expecting a drop in prices post-OMC base price cut. On the contrary, sellers are countering the price drop expectations with the premium received in the respective auctions,", a Kandla-based trader mentioned.

Rationale:

• Two (2) trades of 8,000 t and 10,000 t were recorded in this publishing window and were accorded with 50% weightage.
  
  
• Ten (10) offers and indicative prices were reported and all were taken into consideration as T2 trades, receiving 50% weightage.
  
  

Why concentrate prices remained intact?

• Active response to NMDC auction: NMDC Bacheli had an auction for 88,200 t of iron ore from Chhattisgarh on 17 February, 2024. According to sources, 16,800 t of DRCLO (10-40 mm, Fe 67%) got booked at INR 8,280/t ($100/t) against the base price of INR 7,220/t ($87/t), in addition, 67,200 t of fines (Fe 64%) got booked at INR 6,510/t ($78/t) against the set base price of INR 5,310/t ($64/t) while 4,200 t of ROM (10-150 mm, Fe 65.5%) remained unsold. Prices are on FOR, ex-mines basis and include royalty, DMF & NMET.
  
  
• Bids fall in OMC's iron ore fines auction: OMC conducted an auction for 1.546 mnt of iron ore fines (Fe 54-65%) on 19 February, 2024. The entire quantity was booked at INR 3,910-5,850/t ($47-71/t). Notably, bids increased by around INR 100-1,050/t ($1-13/t) against the set base price. However, bid prices fell up to INR 850/t ($10/t) for majority of the lots against the miner's previous month's auction owing to a drop in pellet offers in central and eastern India. A Jabalpur-based seller told BigMint, "Although OMC had cut the base price for its recent auction, market participants bought the material at premium levels. Also, we are completing our previous orders, and so have kept offers intact."
  
  
• Stability in pellet prices: BigMint's bi-weekly domestic pellet (Fe 63%) index remained stable at INR 9,550/t DAP ($115/t) Raipur on 20 February, 2024 compared to the last assessment on 16 February. Buyers remained cautious about booking fresh material in the expectation of a price reduction by local plants.
  
  

Outlook

Even though iron ore concentrate offers remained supported, bearish market sentiments may prevail as bids from the buyers' side may witness a drop amid price cut expectations. Moreover, the market is eagerly waiting for NMDC's price revision for March 2024 deliveries - which is round the corner - for better price clarity.