India: Low-grade iron ore prices stable in Karnataka; all eyes on NMDC auction

• Supply concerns amid monsoon support offers
  
  
• Market awaiting NMDC's auction results
  
  
• Price drop expected amid weak finished market
  
  

Domestic low-grade iron ore fines (Fe 57%) prices continued to remain under pressure this week in Karnataka's Bellary. BigMint's weekly index for low-grade iron ore fines (Fe 57%) stood at INR 2,650 tonne/t ($32/t) ex-mines Bellary (excluding taxes), stable, w-o-w.

And the Fe 62% fines index was assessed at INR 4,500/t ex-mines Bellary, including taxes. However, few offers were even heard on the higher side of INR 5,000/t owing to constrained supplies of high grade ore owing to the monsoons.

Need-based procurement, material shortage amid heavy monsoons and recovery in low-grade export markets have kept domestic prices supported. In the same line, a Bellary-based buyer told BigMint, "Heavy rains have hampered iron ore mining, resulting in raw material shortage. Offered quantity of miners have also dropped drastically."

Meanwhile, the market is eagerly waiting for the upcoming NMDC auctions to get better price clarity. Talking about the same, another buyer from the region said, "Market participants expect a price drop from NMDC at its upcoming auctions, as finished and sponge markets are down."

NMDC is set to auction around 388,000 t of iron ore from Karnataka on 13 September, 2024. To be specific, NMDC's Kumaraswamy mine will auction 128,000 t of lumps (10-40 mm, Fe 59.58-64.41%) and 220,000 t of fines (Fe 60.53-64.56%) while its Donimalai mine is going to auction 8,000 t of lumps (10-40 mm, Fe 59%) and 32,000 t of fines (Fe 59%) on 13 September, 2024. Floor prices are yet to be declared by the miner which will include royalty, DMF, and NMET.

Rationale:

• Two (2) trades (one directly and one via e-auction) were recorded in this publishing window, out of which only one was considered under T1 trade, receiving 50% weightage.
  
  
• Ten (10) offers and indicative prices were reported, and all were considered as T2 trades, hence, accorded with 50% weightage.
  
  

Market highlights:

• Bellary C-DRI prices down w-o-w: Sponge iron (CDRI) prices in Bellary, Karnataka fell sharply by INR 500/t ($6/t) w-o-w. Prices decreased due to limited buying influenced by slow movement in the semi-finished and finished steel segments.
  
  
• Low-grade export rise w-o-w: BigMint's weekly Indian low-grade iron ore fines (Fe 57%) export index increased by $2.5/t w-o-w to $53.5/t FOB east coast on 12 September, 2024. Indian iron ore seaborne market witnessed a recovery this week post-rise in global and spot iron ore prices.
  
  

Karnataka iron ore sales scenario (5-12 September, 2024)

Outlook

Domestic low-grade iron ore prices are likely to remain volatile, with uncertainty in price movement. However, market sentiments are expected to improve post-monsoon in the region, one of the buyers told BigMint. "Trades will pick up further post-monsoon, once miners start production actively which will improve the supply side. Mining is expected to regain momentum within 10-15 days, " the buyer said. Meanwhile, the market is awaiting NMDC's iron ore auction outcome for price clarity.