India: Low-grade iron ore index drops w-o-w as market awaits NMDC Donimalai price revision

• Recent auctions witness weak response
  
  
• Weak sponge iron market weighs on prices
  
  
• Onset of monsoon to put pressure on prices
  
  

Domestic low-grade iron ore fines (Fe 57%) prices witnessed a drop this week in Karnataka's Bellary. BigMint's weekly index for low-grade iron ore fines (Fe 57%) stood at INR 3,300/t ($39/t) ex-mines Bellary (excluding taxes), a decrease of INR 200/t ($2/t) w-o-w.

Market sentiments in the region have been bearish. A Chitradurga-based miner said: "Currently, SMIORE is the only one to offer low-grade in the market. Although prices have dropped domestic realisation is still better than export. We are waiting for NMDC Donimalai base price announcement now".

A Bellary-based miner told BigMint, "We have sold sufficient quantities this month and not offering currently. However, the upcoming monsoon will impact supplies further as it will hamper mining."

In the same line, one of the major buyers from the region said to BigMint, "Iron ore supplies have ramped up in Karnataka; recent auctions are getting unsold creating pressure on miners. Also, there are expectations that NMDC might cut prices".

Market participants in the region are eagerly waiting for NMDC's base price announcement for its iron ore auction from Donimalai mines. The miner has scheduled an auction for 44,000 t of iron ore from its Donimalai mines in Karnataka on 24 June, 2024. Out of the total quantity, 36,000 t are iron ore fines (Fe 59%) and 8,000 t are lumps (10-40 mm, Fe 59%).

Another auction for 108,000 t lumps (10-40 mm, Fe 60.86-63.79%) and 96,000 t fines (Fe 62.78-63.57%) is scheduled by the miner from its Kumaraswamy mines on 24 June, 2024.

Rationale:

• One (1) trade of 30,000 t was recorded in this publishing window and was considered for calculation, hence, accorded 50% weightage.
  
  
• Thirteen (13) offers and indicative prices were reported, out of which eleven (11) were considered as T2 trades receiving a 50% weightage.
  
  

Meanwhile, sponge (CDRI) prices in Bellary, Karnataka, dropped sharply by INR 650/t ($8/t) to INR 27,650/t ($331/t) exw-Bellary on 20 June. Sponge iron prices in India dropped in key domestic markets due to sluggish sentiments prevailing across regions.

Karnataka iron ore sales scenario (14-20 June, 2024)

Outlook

Domestic low-grade iron ore prices might come under pressure in the coming days due to the onset of the monsoon and bearish market sentiments.