India: Karnataka's iron ore auction sales drop sharply by 39% in H1FY'25

• Bid-offer disparities lead to unsold material
  
  
• Logistical challenges, monsoon impact sales
  
  

Karnataka's iron ore e-auction sales witnessed a significant decline in the first half (April-September 2024) of the financial year 2024-25 (H1FY'25). Sales volumes stood at 5.72 million tonnes (mnt), down by 39% y-o-y from 9.32 mnt in H1FY'24, as per BigMint's data.

Furthermore, September saw 1.05 mnt of iron ore sold through e-auctions, an increased of 5% compared to around 1 mnt in the previous month. September's volume comprised 544,000 tonnes (t) of fines and 508,000 t of lumps.

Factors which affected iron ore e-auction sales:

• Bid-offer disparities: BigMint observed that auction volumes decreased in the period under review due to some miners exiting the market and others offered only limited quantities. Additionally, few unparallel prices opened by the miners against prevailing rates, leading to a bid-offer disparity, and considerable volumes of material remaining unsold.
  
  
• Extended monsoon: In FY'25 region also faced extended monsoon leading to reduced production also faced challenges, such as logistical difficulties.
  
  
• NMDC's union agitation: In May 2024, workers of the National Mineral Development Corporation (NMDC) staged protests seeking wage revisions, which disrupted plant operations across units and affected dispatches via rake.
  
  
• Frequent transportation strikes: A slew of strikes by lorry drivers hindered iron ore dispatches and led to logistical challenges. Consequently, amid escalating concerns over supply chain stability, miners reduced the volumes on offer.
  
  

Company-wise volumes in H1FY'25 vs H1FY'24

Iron ore prices rise y-o-y: The weighted average prices of iron ore lumps and fines increased y-o-y. Weighted average prices of Fe60% fines auctions stood at INR 3,625/t in H1FY'25, a rise of around INR 817/t against INR 2,808/t in H1FY'24. Meanwhile, weighted average prices of Fe63% lump were at INR 4,583/t in H1FY'25, an increase of around INR 1,158/t against INR 3,425/t in H1FY'24. Prices are exclusive of taxes.

Outlook

Iron ore volumes offered through e-auctions are expected to rise in the near term, as miners have resumed production and actively begun offering supplies following the end of the southwest monsoon. Additionally, BigMint expects prices to remain elevated, as several miners have raised their offers in recent auctions.