India: Odisha iron ore fines index edges down after OMC auction

• Over 2.2 mnt receives bids in OMC auction
  
  
• Private miners yet to revise offers
  
  

Iron ore prices in Odisha displayed a mixed trend following the recent OMC auction, with weighted average bids for fines declining, while lump prices increased slightly compared to last month's bids. Despite price fluctuations, the auction was successful, with 100% of the material being sold, reflecting a positive outlook on demand. However, concerns remain as regards material availability, especially with the limited supply of higher-grade iron ore from miners.

BigMint's Odisha iron ore fines (Fe 62%) index inched down by INR 50/t ($0.5/t) to INR 5,300/t ($63/t) ex-mines on 21 December 2024. In this publishing window, steelmakers concluded around 66,000 t of higher grade fines (Fe62%) deals at INR 4,900-5,250/t ($58-62/t) ex-mines from private miners.

OMC conducted an auction of approximately 2.26 mnt of iron ore, (0.861 mnt of lumps and 1.401 mnt of fines) on 18 December. Following the positive response from steelmakers, the entire quantity was sold at INR 2,250-8,150/t ($26-96/t). However, bids (weighted average) decreased by around INR 150/t ($2/t) against last month's auction for fines while increased by INR 200/t (2.5/t) for lumps. The miners reduced base prices by INR 300-400/t ($4-5/t) m-o-m.

A market participant commented: "Steelmakers expressed concerns over the ongoing shortage of material, as only a few miners are offering premium ore. The market is still facing challenges in securing high-grade materials. On the supply side, some private miners have kept their offers unchanged, while others are yet to adjust prices despite the auction trends."

Ahead of the OMC auction, a few miners managed to conclude lower and mid-grade bulk deals at relaxed prices, but the export market has slowed this week, making participants more cautious about committing to new trades.

A buyer informed, "The recent increase in prices of sponge iron and other steel products may bolster the tradable price of iron ore in the coming days. However, despite the material shortage, steelmakers are focusing on purchasing raw materials to satiate immediate needs, opting for lower prices to maintain their inventories."

Going forward, miners are now closely analysing market dynamics to determine their strategies for the coming week. New offers from private miners are expected next week.

Rationale

• T1 - Four (4) deals of Fe62% fines were recorded in the publishing window and three (3) were considered for price computation and were given a 50% weightage for index calculation.
  
  
• T2 - BigMint received twelve (12) offers and indicative prices under the T2 category (offers, indicative, and bids) in this publishing window. Eight (8) 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

• Domestic, export pellet prices drop w-o-w: Pellet (6-20 mm, Fe 62.5%) prices in Odisha's Barbil inched down by INR 50/t ($1/t) w-o-w to INR 7,800/t ($92/t) loaded to wagon. Pellet (Fe 62.5%, 6-20 mm) prices in Durgapur inched up by INR 50/t ($0.5/t) w-o-w to INR 9,250/t ($109/t) exw on 20 December. BigMint's India pellet (Fe 63%, 3% Al) export index (FOB east coast) fell by $4/t w-o-w to $97.5/t on 20 December.
  
  
• Fines export prices fall w-o-w: BigMint's bi-weekly Indian low-grade iron ore fines (Fe 57%) export index decreased by $2/tonne (t) w-o-w to $65/t FOB east coast, India, on 19 December 2024. As per the sources, a 55,000 t fines (Fe55-57%) export deal got concluded at $76.5/t CFR China for January delivery a couple of days back. Iron ore fines export prices dropped this week, driven by weakened demand in the Chinese market and a fall in global fines indices.
  
  
• Sponge iron prices rise w-o-w: According to BigMint's assessment, sponge iron C-DRI (FeM 80%) prices in Rourkela surged by INR 200/t ($2.5/t) w-o-w to INR 26,300/t ($310/t) on 21 December. Similarly, steel billet (100*100 mm) offers in Rourkela increased INR 800/t ($9/t) w-o-w to INR 38,200/t ($450/t) today.
  
  

Outlook

According to BigMint analysis, iron ore prices are expected to remain at the current level as miners may keep their offers stable in the coming days amid demand and supply concerns in the market.