India: Odisha iron ore fines index drops INR 200/t ($2.5/t) following weaker bids at OMC auction

• Bids drop by INR 250/t m-o-m for both fines and lumps
  
  
• Export prices show some gains this week amid active trades
  
  

BigMint's Odisha iron ore fines (Fe 62%) index fell by INR 200/t ($2.5/t) w-o-w to INR 5,000/t ($58/t) ex-mines on 18 January 2025. Overall, around 200,000 t of iron ore (fines and lumps) deals were recorded from Odisha this week.

Odisha Mining Corporation (OMC) auctioned approximately 2.667 mnt of iron ore (1.078 mnt of lumps and 1.589 mnt of fines) on 17 January. Around 1.493 mnt (94%) fines and the entire quantity of lumps were sold at INR 2,550-8,800/t. However, bids (weighted average) decreased by around INR 250/t against last month's auction for fines and lumps. The miners raised base prices by INR 100-150/t m-o-m.

Factors behind drop in bid prices

Increase in OMC's offered quantity - OMC auctioned 2.667 mnt of iron ore yesterday against 2.26 mnt offered in December. Recovery in production volumes, and improved dispatches, lead to moderated bids during the auction.

Some sponge iron players shift preference to lumps - OMC's lump auction garnered active participation, with the entire quantity getting sold. However, the auction of fines witnessed 94% of the offered quantity receiving bids. Pellet (6-20 mm, Fe 62.5%) prices in Odisha's Barbil remained unchanged w-o-w at INR 7,900/t ($92.5/t) loaded to wagon. Pellet (Fe 62.5%, 6-20 mm) prices in Durgapur remained stable w-o-w at INR 9,250/t ($108/t) exw on 17 January. Market sources highlighted preference of sponge iron players for lumps over pellets.

Sponge iron prices fall w-o-w: According to BigMint's assessment, sponge iron C-DRI (FeM 80%) prices in Rourkela fell by INR 200/t ($2.5/t) w-o-w to INR 25,600/t ($297/t) on 17 January. Similarly, steel billet (100*100 mm) offers in Rourkela remained largely stable w-o-w at INR 37,700/t ($437/t) yesterday.

Rationale

• T1 - Two (2) deals of Fe62% fines were recorded in the publishing window, and both considered for price computation and given a 50% weightage for index calculation.
  
  
• T2 - BigMint received eighteen offers and indicative prices under the T2 category (offers, indicative, and bids) in this publishing window. Fourteen (14) were taken into consideration and given a 50% weightage. To check BigMint's iron ore assessment, pricing methodology, and specification document, click here.
  
  

Iron ore export prices have witnessed an increase with recovery in global prices, lower freight rates and INR depreciation. India's pellet (Fe 63%, 3% Al) export index (FOB east coast) rose by $9/t w-o-w to $103/t on 17 January. A pellet-maker concluded a 50,000 t export deal for pellets (Fe 63%, 8% Sl2O3+SiO2) through tender at $109-110/t FOB.

BigMint's bi-weekly Indian low-grade iron ore fines (Fe 57%) export index rose by $6/t w-o-w to $66/t FOB east coast, India, on 16 January. Around 165,000 t of confirmed deals were recorded in the export market in this publishing window at a price of $74-76/t CFR China. Market sources said that deals were concluded this week at a 17.5-19% discount on the global fines index, with more negotiations underway.

Outlook

According to BigMint analysis, with shifting buyer preferences and potential price revisions, the iron ore market remains dynamic, indicating further adjustments in the near term.

A trader commented, "Steelmakers were observed securing iron ore for the upcoming month, as environmental clearances (EC) of some private miners are set to expire for FY'25. The uncertainty surrounding miners' EC renewals has pushed us to procure additional material to ensure uninterrupted production."

Meanwhile, miners may revise their offers in the coming week, aligning with current auction bids. A miner informed, "We are closely monitoring the bidding trends and may adjust our prices to reflect market dynamics."