India: Karnataka's iron ore e-auction sales drop 8% m-o-m in Oct'24 amid market uncertainty

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

Iron ore e-auction sales volumes in Karnataka dropped by around 8% m-o-m to 969,645 tonnes (t) in October 2024 against 1.05 million tonnes (mnt) in September 2024, data maintained with BigMint shows. Of the total volumes sold in the month under review, fines accounted for 474,000 t, while lumps constituted 495,645 t.

A series of strikes by lorry drivers and monsoon-related rainfall disrupted iron ore dispatches and created significant logistical challenges. Consequently, amid escalating concerns regarding supply chain stability, miners reduced the volumes on offer. Bid-offer disparities also led to a notable volume going unsold at auctions.

Miner-wise breakup - NMDC tops charts

• National Mineral Development Corporation (NMDC), India's largest iron ore miner, sold around 726,000 t from Karnataka via auctions in October, a marginal drop of 3% against 708,000 t in September. Of the total volumes sold, 444,000 t were fines (up 7% m-o-m) and 282,000 t were lumps (down 3% m-o-m). NMDC emerged as the top auctioneer this month.
  
  
• Karnataka State Minerals Corporation Limited (KSMCL) emerged as the second-leading miner, selling around 30,000 t fines and 115,395 t lumps. This took its total sales volume via e-auctions to 145,395 t in October, down by around 24% m-o-m. This decrease was primarily attributed to unsold lots at auctions, as the set base prices were considered too high by market participants. Furthermore, some auctions were postponed due to ongoing market uncertainty, an official source informed BigMint.
  
  
• Vedanta sold 52,000 t of iron ore lumps in October, stable as compared to the previous month.
  
  
• R Praveen Chandra sold around 19,250 t of lumps in October. Notably, the miner did not offer any material in the merchant market during the previous month.
  
  
• Sandur Manganese and Iron Ores (SMIORE) reported sales of just 15,000 t of lumps in October, an 80% m-o-m decline from the 75,000 t sold in September. This sharp drop was primarily due to the miner not offering any fines during the month under review.
  
  
• Sri Kumaraswamy Mineral Exports Private Limited (SKMEPL) sold only around 12,000 t of lumps, as the miner primarily focused on direct sales rather than e-auctions. However, sales volumes saw a three-fold increase in October, compared to just 4,000 t in September.
  
  

E-auction prices hold firm m-o-m

The monthly weighted average e-auction prices of iron ore fines (Fe 60%) and lumps (10-40 mm, Fe 63%) remained stable m-o-m at INR 3,400/t and INR 4,400/t, respectively. Prices are on ex-mines basis, excluding royalty, DMF, and NMET.

Outlook

Iron ore e-auction volumes are likely to fluctuate in the near term, as miners have reduced their offers despite resuming full production after the monsoon season. Additionally, market volatility in raw pellets, sponge CDRI, and steel could influence demand levels.