India: Karnataka iron ore miners await NMDC's upcoming auction for price clarity

Domestic iron ore low-grade fines (Fe 57%) prices in Karnataka remained unchanged w-o-w at around INR 2,500-2,800/tonne (t) ex-mines, data maintained with SteelMint showed.

Meanwhile, miners in the state are waiting for the NMDC's upcoming iron ore auction from Kumaraswamy mines to a better price clarity. The miner has scheduled an auction for 746,000 t of iron ore lumps and fines (Fe 57.48-65.63%) on 12 May, 2023.

Weak response to NMDC's previous auction

As reported earlier by SteelMint, the miner had decreased base prices for its iron ore auction held on 6 May from Donimalai mines. Prices for fines (-10mm, Fe 59%) were at INR 2,877/t, down by around INR 100/t, and lumps (10-40mm, Fe 61%) at INR 3,132/t, down by around INR 300/t. Prices exclude royalty, DMF, and NMET.

The auction was for 600,000 t of iron ore (both fines and lumps). According to sources, 16,000 t of lumps (10-40mm, Fe 61%) were booked at base price of INR 3,132/t, and 16,000 t of fines (Fe 59%) were sold at base price of INR 2,877/t.

"As the auction got a weak response, market participants are expecting a further drop in iron ore prices, resulting in a downward correction in domestic low-grade fines prices," said a source.

Meanwhile, one of the leading iron ore miners from the state, has concluded a deal of 4,000 t of lumps (Fe 63.52%) at around INR 4,795/t ex-mines, including taxes.

E-auctions scenario

• Recent e-auctions from Karnataka have witnessed active responses. Sandur Manganese and Iron Ores Ltd (SMIORE) conducted an auction for sale of 60,000 t of iron ore lumps (5-40mm, Fe 58-59.5%) from Bellary on 4 May. The entire quantity offered was booked at INR 4,065-5,045/t against floor price of INR 3,305-4,100/t. Prices were inclusive of royalty, DMF, and NMET.
  
  
• Also, at Vedanta's auction for 12,000 t of iron ore lumps (10-40mm, Fe58.5%) on 5 May, the entire quantity got booked at INR 4,103/t against floor price of INR 4,093/t. Prices exclude royalty, DMF, and NMET.
  
  
• Another Vedanta auction for 12,000 t of iron ore lumps (6-20mm, Fe56.5%) on 9 May saw the entire quantity getting booked at base price of INR 3,267/t which excludes royalty.
  
  

Outlook

If NMDC Karnataka cuts prices for its tomorrow's iron ore auction, prices of low-grade fines may come under pressure.