India: Iron ore fines prices in Karnataka remain supported as NMDC hikes base prices for auction

Domestic low-grade iron ore fines (Fe 57%) prices remained unchanged this week in Karnataka's Bellary. Shortage of ore in the region, supportive sentiments from low-grade iron ore export market and NMDC's base price hike for its recent Donimalai auction kept domestic prices supported, SteelMint learnt from sources.

SteelMint's weekly index for low-grade iron ore fines (Fe 57%) stood at INR 4,000/tonne (t) ex-mines Bellary, stable, w-o-w.

"Shortage of low-grade ore continues to prevail in the region, supporting prices. Meanwhile, NMDC's recent base price hike in its Donimalai auction followed by active participation also supported offers", said a Karnataka-based miner.

NMDC signs LTA for iron ore sales from Karnataka

In a significant development, NMDC has signed a long-term agreement (LTA) for iron ore sales from its Donimalai mines in Karnataka, sources informed.

The LTA, which has been recently signed with a few Karnataka-based players, will follow a 80:20 rule in which 20% of iron ore will be put into auction with the objective of price discovery, while the rest 80% will be offered under the long-term agreement.

Rationale:

• No trade was recorded in this publishing window and was not taken into consideration. Hence, accorded 0% weightage.
  
  
• Eleven (11) offers and indicative prices were reported, with nine (9) of them being considered as T2 trades and receiving 100% weightage.
  
  

Factors supporting low-grade ore prices

• Hike in NMDC auction base price: NMDC lifted the base price by around INR 200/t for its Donimalai auction. Prices for fines (Fe 54%) at 2,439/t are higher by INR 182/t and lumps (10-40mm, Fe 54%) prices were set at INR 2,547/t, up by INR 169/t. Meanwhile, the miner had an auction for 20,000 t of iron ore on 8 December from Donimalai. The entire quantity of 8,000 t of lumps (10-40 mm, Fe 54%) and 12,000 t of fines (Fe 54%) was booked at INR 3,767/t and INR 2,639-2,649/t against base prices of INR 2,547/t and INR 2,439/t, respectively. Bid prices for lumps and fines moved up by INR 1,220/t & INR 210/t, respectively. Prices include royalty, DMF and NMET.
  
  
• Supportive sentiments from export market: A few traders along the East Coast sold their material at firm prices this week, while other deals were under negotiation. Inquiries for Indian low-grade iron ore fines have increased as most of the overseas buyers have shifted to iron ore fines instead of raw pellets. As per sources, market fundamentals have increased in the export market amid positive response from buyers, and in the next few days, deals will increase amid enhanced demand.
  
  
• Pellet prices rise in Bellary: Pellet (Fe 63%) prices in Bellary rose by INR 300/t to INR 10,600/t exw today compared with 8 December. Pellet manufacturers have increased offers following hike in sponge iron prices and shortage of high-grade material in the region.
  
  

Karnataka iron ore sales scenario (8-14 Dec'23)

Outlook

Domestic low-grade iron ore prices in Karnataka are expected to remain supported in the near term amid export price rally and shortage of material in the region.