India: Odisha iron ore fines index drops to 1-month low post-OMC auction

• OMC auction sells around 2.8 mnt (96%) iron ore
  
  
• Bids drop by around INR 1,000-1,100/t m-o-m
  
  
• Merchant miners to announce revised offers next week
  
  

BigMint's Odisha iron ore fines (Fe62%) index dropped by INR 500/t ($6/t) w-o-w to INR 4,800/t ($57/t) ex-mines on 22 June, 2024. No deals of standard Fe62% fines deal recorded from the merchant miners as major buyers were focused on the OMC iron ore auction. Index has fallen to one month low, as per data maintained with BigMint.

The iron ore prices in the Odisha region fell sharply post-OMC auction as bids declined for both lumps and fines compared to the last month. The continuous downtrend in the domestic pellet, sponge and finished steel prices along with pressure from the export market weighed down the bids prices in Odisha's OMC auction. The buyers participated actively but didn't put the bids aggressively.

In OMC's auction for 2.917 mnt of iron ore fines (Fe 54-65%) conducted on 20 June, 2024, around 1.68 mnt (94% of the offered quantity) fines were booked at INR 2,570-5,750/t ($31-69/t) ex-mines while around 1.114 mnt (99% of the offered quantity) of lumps fetched bids of INR 3,750-7,150/t ($45-86/t). Bids decreased by around INR 1,000/t ($12/t) and INR 1,100/t ($13/t) (weighted average) for the majority of fines and lumps lots against last month respectively. Notably, the company had reduced base prices m-o-m by up to INR 250-300/t ($3-4/t) and INR 1,150-1,350/t ($14-16/t) for both fines and lumps, respectively.

However, the m-o-m drop in pellet and sponge prices have put pressure on other merchant miners to also lower their offers. Although they have not revised their offers yet, they plan to make corrections next week after analysing the market. Due to the underperformance of the Indian seaborne market, they are now compelled to sell in the domestic market.

Rationale:

• T1- Four (4) deals were recorded in this publishing window but two (2) were taken for price computation. These were given 50% weightage for index calculation.
  
  
• T2- BigMint received nineteen (19) offers and indicative prices under T2 trade deals in this publishing window. Eleven (11) were taken into consideration and given 100% weightage. To check BigMint's iron ore assessment, pricing methodology, and specification document Click here
  
  

Market highlights:

• Pellet offers fall w-o-w: Pellet (6-20 mm, Fe 62.5%) prices in Odisha's Barbil significantly fell by INR 650/t ($8/t) w-o-w. The current assessment stands at INR 8,050/t ($96/t) loaded to wagon. Pellet (Fe 62.5%, 6-20 mm) prices in Durgapur decreased by INR 500/t ($6/t) w-o-w to INR 8,900/t ($107/t) exw on 21 June.
  
  
• Fines export prices stable w-o-w: BigMint's weekly Indian low-grade iron ore fines (Fe 57%) export index inched up by $1/t w-o-w to $58/tonne (t) FOB east coast on 20 June 2024. No confirmed deal of Fe 57% fines from India this week was heard. Meanwhile, a prominent exporter from Odisha sold 55,000 t of Fe57% cargo this week but the transaction is yet to be confirmed by the seller.
  
  
• Sponge iron prices decline as billet offers drop: BigMint's assessment for sponge iron C-DRI (FeM 80%) prices in Rourkela fell by INR 1,750/t ($21/t) w-o-w to INR 26,450/t ($316/t) on 22 June. Meanwhile, steel billet (100*100 mm) prices in Rourkela dropped by INR 1450/t ($17/t) w-o-w to INR 40,250/t ($494/t) today.
  
  

Outlook

Iron ore offers from other merchant miners in Odisha are expected to become clearer next week. However, offers are expected to drop as per sources.