India: Low-grade iron ore index stable w-o-w; trades remain subdued

• Supply concerns persist even after strike ends at NMDC
  
  
• Market awaits base price announcement for upcoming NMDC auction
  
  

Domestic low-grade iron ore fines (Fe 57%) prices remained unchanged in Karnataka's Bellary. BigMint's weekly index for low-grade iron ore fines (Fe 57%) stood at INR 3,500/t ($42/t) ex-mines Bellary (excluding taxes), largely stable w-o-w. No trades were recorded in this publishing window.

Although offers remained stable this week, market sentiments in the region has been bearish amid supply concerns due to unavailability of low-grade iron ore fines. One buyer based in the region said: "Even after NMDC's slowdown ended last week, there is still supply shortage in the market. We are unable to procure Fe 57% material in the current scenario. Also, considering the situation in the export market, domestic prices are also under pressure."

On the supply side, volumes as part of long-term agreements (LTAs) are also getting delayed by the major miners in the region, thereby widening the supply-demand gap, sources informed.

A Chitradurga-based miner told BigMint, "Currently, we are not offering low-grade in the export market as we are still getting better realisations in the domestic market. However, the upcoming monsoons will impact our production and supplies as well."

Meanwhile, market participants in the region are eagerly waiting for NMDC's base price announcement for its iron ore auction from Donimalai, with expectations of a price hike, especially after the strike got over at NMDC and normalcy in operations has been restored.

Rationale:

• Zero (0) trades were recorded in this publishing window and was accorded 0% weightage.
  
  
• Sixteen (16) offers and indicative prices were reported, out of which fourteen (14) were considered as T2 trades receiving a 100% weightage.
  
  

Why are low-grade fines prices under pressure?

• Low-grade export index falls w-o-w: BigMint's weekly Indian low-grade iron ore fines (Fe 57%) export index fell sharply by $9.5/t w-o-w to $57/t FOB east coast on 6 June. No major deals were reported this week as exporters remained sidelined amid decline in global iron ore fines and futures prices.
  
  
• Sponge CDRI prices drop w-o-w: Sponge (CDRI) prices in Bellary, Karnataka, dropped INR 150/t ($2/t) to INR 29,000/t ($347/t) exw-Bellary on 6 June. Sponge iron prices in India dropped in key domestic markets due to negative sentiments prevailing across regions.
  
  

Karnataka iron ore sales scenario (30 May-6 June, 2024)

Outlook

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