India: Iron ore fines prices in Odisha rise by INR 350/t ($4/t) following OMC auction

• 3 mnt iron ore sold in OMC auction
  
  
• INR 300-900/t premium bids for fines
  
  
• Merchant miners hope to hike offers next week
  
  

BigMint's weekly Odisha iron ore fines (Fe 62%) index rose by INR 350/t to INR 4,950/t ($59/t) ex-mines on 20 April 2024. Reportedly, a decent quantity of Fe62% fines trades were concluded in the auction, with premium bids received.

Iron ore fines prices increased sharply in Odisha while lumps offers also improved this week after the miners. However, other merchant miners still not announced its revised offer but that may be expected to get more price clarity next week.

OMC auctioned 3 mnt of iron ore from Odisha on 19 April. The steelmakers participated actively in the auction and the entire quantity of fines (1.828 mnt, Fe 54-65%) was booked at INR 2,850-5,600/t. While 1.163 mnt (99% of offered quantity, Fe 58-64%) was booked at INR 5,000-7,950/t. Bids for fines and lumps increased by INR 300-900/t and INR 200-1,050/t for the majority lots as against last month's bids.

A buyer source said: "The auction received a very good response from buyers and the bids also inched up m-o-m. Increased pellet offers along with the sharp hike in sponge iron and semi-finished prices kept market confidence supported."

The Iran-Israel conflict, along with improvement in Indian raw material export offers, has kept supported iron ore prices. However, these premium bids were previously expected at these levels, as there is demand in the market for iron ore, a source explained.

The benchmark iron ore fines Fe 62% price increased w-o-w by $6/t to $118/ t CFR China on 19 April due to positive economic news about steel production coupled with increased iron ore demand. Prices are being supported by the resumption of steel production and restocking activity for May delivery cargoes. China is accelerating the issuance of special bonds worth $138 billion for construction projects to boost domestic steel consumption.

Some pellet makers said that the sustainability of the sharp price hike of finished steel and sponge iron will drive the raw material offers. However, the iron ore prices will remain at a supporting level for the next two to three weeks.

Rational:

• T1- Three deals of OMC auction were recorded in this publishing window and one was taken for price computation. These were given 50% weightage for index calculation.
  
  
• T2- BigMint received twelve (12) offers and indicative prices under T2 trade deals in this publishing window. Nine (9) were taken into consideration and given 50% weightage. To check BigMint's iron ore assessment, pricing methodology, and specification document Click here.
  
  

Factors affecting prices-

• Pellet offers rise in domestic: Pellet (6-20 mm, Fe 62.5%) prices in Odisha's Barbil rose by around INR 450/t ($6/t) w-o-w. The current assessment stands at INR 8,350/t ($100/t) loaded to wagon. Pellet (Fe 62.5%, 6-20 mm) prices in Durgapur also increased by INR 550/t ($7/t) w-o-w to INR 9,450/t ($115/t) exw on 19 April. Meanwhile, BigMint's India pellet (Fe 63%, 3% Al) export index (FOB east coast) increased by $7/tonne (t) w-o-w to $103/t on 17 April, 2024.
  
  
• Export offers sharply up: BigMint's weekly Indian low-grade iron ore fines (Fe 57%) export index rose by $8.5/t w-o-w to $65/t FOB east coast on 18 April 2024. Earlier this week, one deal of 55,000 t was heard for standard Fe 57% fines at $74-75/t CFR China. One more agreement of 55,000 t was heard at around $77-78/t CFR China recently but it is yet to be confirmed. Discount for Fe 56/57 grade also stands at around 25-26% from the last week which was 25-27%. In another export deal for Fe 54 fines were concluded by an Odisha-based miner. around three shipments have been booked for this week at the index price of around $62-64 CFR China (32-33% discount).
  
  
• Sponge iron prices sharply up in Rourkela: BigMint's assessment for sponge iron C-DRI (FeM 80%) prices in Rourkela rose by INR 1250/t ($15/t)w-o-w to INR 30,650/t ($368/t) today. Meanwhile, steel billet (100*100 mm) prices in Rourkela surged by INR 1,800/t ($22/t)w-o-w to INR 43,600/t ($523/t) today.
  
  

Outlook

Iron ore offers in Odisha will attain clarity next week as miners are expected to revise offers. Meanwhile, other Odisha-based miners said that they would raise offers by around INR 300-500/t after the decent response witnessed in OMC's auction.