India: Odisha iron ore fines index drops by INR 150/t w-o-w amid weak market sentiments

• Market under pressure due to downtrend in steel prices
  
  
• Steel producers in eastern India conclude moderate deals
  
  

Iron ore prices in the Odisha region remained under pressure this week following the production and logistic hurdles due to heavy rainfall along with the pressure from downstream steel market. Few deals were recorded this week as pellet producers purchased need-based fines from the major merchant miners.

BigMint's Odisha iron ore fines (Fe 62%) index fell by INR 150/tonne (t) w-o-w to INR 4,500/t ($56/t) ex-mines on 3 August, 2024. The merchant mines concluded around 13,000 t of iron ore fines (Fe61-62%) deals at INR 4,350-4,650/t this week. Meanwhile, over 200,000 t of deals of iron ore across all grades (fines + lumps) were recorded from the Odisha region in the last one week.

A miner said: "We have taken a few new orders this week at the current offers but the market is unstable due to pressure from pellet and sponge prices in the eastern region. The heavy rainfall in the Odisha region impacted the mines' operation and material dispatches in the last few days. We are facing challenges to deliver our previous contracts amid logistics hurdles. Prices may remain under pressure in the near-term following current market dynamics."

Few sources said that market participants remained cautious about the new buying following the uncertainty about prices due to the logistic challenges and drop in pellet and sponge prices in the eastern region. The buyers quoted that miners may drop iron ore offers in the next week due to lower bids from the buyers.

A steelmaker said that major miners are giving the material at discounts due to weak market sentiments and lower prices in the export market. Around INR 300-500/t gap was witnessed in the offers prices and transacted price from the few miners due to selling pressure.

Rationale:

• T1- Two (2) deals of Fe 62% fines were recorded from merchant miners in this publishing window and considered for price computation. These were given a 50% weightage for index calculation.
  
  
• T2- BigMint received twenty two (22) offers and indicative prices under T2 trade deals in this publishing window. Twenty (20) were taken into consideration and given a 50% weightage. To check BigMint's iron ore assessment, pricing methodology, and specification document Click here
  
  

Market highlights:

• Pellet prices under pressure in both domestic, exports: Pellet (6-20 mm, Fe 62.5%) prices in Odisha's Barbil fell by INR 50/t w-o-w. The current assessment stands at INR 7,350/t ($94/t) loaded to wagon. Pellet (Fe 62.5%, 6-20 mm) prices in Durgapur inched down by INR 250/t ($3/t) w-o-w to INR 8,100/t ($104/t) exw on 2 August. BigMint's India pellet (Fe 63%, 3% Al) export index (FOB east coast) remained stable w-o-w at $93/t on 31 July.
  
  
• Fines export prices up w-o-w: BigMint's weekly Indian low-grade iron ore fines (Fe 57%) export index increased by $1.5/t w-o-w to $58/t FOB east coast on 1 August 2024. A few active deals of iron ore fines export were witnessed in the last one week which added up to around 330,000 t. A deal of 55,000 t (Fe 57%) fines was concluded at $70/t CFR China recently. A miner from Odisha sold some cargos at a 20% discount on the global index.
  
  
• Sponge iron prices fall w-o-w: BigMint's assessment for sponge iron C-DRI (FeM 80%) prices in Rourkela fell by INR 200/t ($2.5/t) w-o-w to INR 26,000/t ($305/t) on 3 August. Meanwhile, steel billet (100*100 mm) prices in Rourkela dropped by INR 100/t ($1/t) w-o-w to INR 38,100/t ($458/t) today.
  
  

Outlook

As per BigMint's analysis, Odisha iron ore lumps prices may remain under pressure in the coming days due to falling steel prices in the past few days. However, the fines prices are expected to remain volatile due to tight availability in the rainy season along with pressure from pellet prices.

A trader said that deals may remain on the lower side in the coming weeks due to the weather constraints in the Odisha region as buyers opted a cautious stance and observing the market dynamics. However, regular deals continue to be concluded by the steelmakers.