Karnataka: Low-grade iron ore prices remain stable amid subdued trade

• Sponge, finished steel markets remain sluggish
  
  
• NMDC's Kumaraswamy auction fetches premium bids
  
  

Domestic low-grade iron ore fines (Fe 57%) prices remained stable in Bellary, Karnataka. BigMint's weekly index for low-grade iron ore fines (Fe 57%) held steady at INR 2,650/tonne ($32/t) ex-mines Bellary (excluding taxes), showing no change this week.

A lack of active trades throughout the week, combined with the monsoon season in the region and weak sentiments from the export and sponge iron (CDRI) markets, have put pressure on low-grade iron ore prices in Karnataka, according to BigMint.

"In the auction, offers have risen due to supply concerns, as this specific grade is unavailable in the market," said a major Bellary-based seller.

Echoing this sentiment, another Bellary-based seller told BigMint, "Miners are not willing to lower offers from this level due to ongoing supply concerns. Even NMDC received competitive bids that matched the current market levels."

Rationale:

• No trade was recorded in this publishing window and accorded with 0% weightage..
  
  
• Thirteen (13) offers and indicative prices were reported, out of which eleven (11) were considered as T2 trades, given 100% weightage.
  
  

Factors supporting low-grade prices:

• NMDC's iron ore auction fetches premium bids: NMDC held an auction for 320,000 t of iron ore on 31 August, 2024 from its Kumaraswamy mines. According to sources, 96,000 t of lumps (10-40 mm, Fe 64.74-65.04%) were booked at INR 5,844-5,964/t against base price of INR 4,744-4,804/t and 216,000 t of fines (Fe 59.95-65.94%) were booked at INR 3,212-5,384/t against base price of INR 3,202-4,234/t. Bid prices of lumps and fines were higher by INR 1,220/t and 1,150/t, respectively. Prices were on ex-mines basis (including royalty, DMF, and NMET)
  
  
• Low-grade export prices drop w-o-w: BigMint's weekly Indian low-grade iron ore fines (Fe 57%) export index decreased by $7.5/t w-o-w to $51/t FOB east coast on 5 September 2024. The discount level was recorded at 21-22% on the global fines index, while deals from India remained subdued. Iron ore prices fell sharply in the overseas market this week, following a continuous decline in global fines spot and futures prices. Sluggish market activity was observed among buyers and sellers amid lower buying interest from Chinese mills.
  
  

Karnataka iron ore sales scenario (30 August-5 September 2024)

Outlook

Domestic low-grade iron ore prices are likely to remain under pressure due to weak demand from the sponge iron and steel markets, as well as a sluggish export market. However, supply concerns may limit any significant price decline.