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

• Absence of active low-grade offers
  
  
• Weak sponge and export market weigh on prices
  
  
• Upcoming monsoon to put pressure
  
  

Domestic low-grade iron ore fines (Fe 57%) prices remained unchanged this week 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), 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 miner from the region said: "Prices are unchanged. Scant number of miners are only there to offer low-grade currently leading to supply concerns. Export market, pellet and sponge sentiments are down too."

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 wider, 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 monsoon will impact supplies further as it will hamper mining process."

However, NMDC's recent iron ore auction from Kumaraswamy mines on 10 June, 2024 fetched premium bids. 106,000 t of lumps (10-40 mm, Fe 61.08-62.60%) got booked at INR 4,983-5,821/t ($60-70/t) against the base price of INR 4,963-5,337/t ($59-64/t) while 196,000 t of fines (Fe 58.97-62.86%) got booked at INR 4,063-5,204/t ($49-62/t) against the base price of INR 3,833-4,664/t ($46-56/t). Prices are on ex-mines basis, including royalty, DMF and NMET. Notably, bid prices for lumps and fines were higher by INR 680/t ($8/t) and 540/t ($6/t), respectively.

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

Rationale:

• One (1) trade via e-auction was recorded in this publishing window but was not considered for calculation and was accorded 0% weightage.
  
  
• Fifteen (15) offers and indicative prices were reported, out of which thirteen (13) were considered as T2 trades receiving a 50% 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. Most of the buyers were away from the market during the Dragon Boat festival holidays in China. Indian export market for iron ore fines remained under pressure this week amid lack of buying inquiries and weak market fundamentals in the domestic Chinese market. Meanwhile, sellers remained in wait-and-watch mode as current market floating prices were not viable for them to sell lower-grade fines in the overseas market.
  
  
• Sponge CDRI prices drop w-o-w: Sponge (CDRI) prices in Bellary, Karnataka, dropped sharply by INR 700/t ($8/t) to INR 28,300/t ($339/t) exw-Bellary on 13 June. Sponge iron prices in India dropped in key domestic markets due to sluggish 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 monsoon, unavailability of material and bearish export market sentiments.