India: Odisha iron ore fines index edges down amid prices pressure from mills

• Around 450,000-t iron ore deals seen this week
  
  
• Offers expected to decline in the near term
  
  

The Odisha iron ore market witnessed a slight drop in prices following the fall in sponge and semi-finished prices in central-eastern India. Trade activity remained moderate with need-based buying seen from steelmakers.

BigMint's Odisha iron ore fines (Fe 62%) index inched down by INR 50/t ($0.5/t) to INR 5,250/t ($61/t) ex-mines on 28 December 2024. In this publishing window, steelmakers concluded around 10,000 t of higher grade fines (Fe62%) deals at INR 5,250/t ($61/t) ex-mines from private miners. Overall, around 450,000 t of iron ore (fines and lumps) deals were recorded from the Odisha market this week.

Miners are facing challenges due to material shortages and price pressures, which may result in further reductions in their offers in the coming days, despite receiving inquiries. Market activity remains steady, with a few participants reporting decent trades this week. However, shortage of higher-grade fines is prompting steelmakers to purchase mid-grade fines to meet their needs.

A miner commented: "Although demand remains, we are concentrating on fulfilling old contract dispatches and have refrained from taking new orders due to limited material availability. Inquiries for fines were decent in the market amid the material shortage. Some big exporters are looking for mid-grade fines to blend with lower grade material for export cargos."

Buyers are adopting a wait-and-watch approach, anticipating improvements in pellet and sponge iron prices before committing to fresh iron ore purchases. Current market sentiments remain subdued as the market faces challenges posed by lower steel prices and constrained raw material availability.

Rationale

• T1 - One (1) deal of Fe62% fines was recorded in the publishing window, considered for price computation and given a 50% weightage for index calculation.
  
  
• T2 - BigMint received twenty-eight (28) offers and indicative prices under the T2 category (offers, indicative, and bids) in this publishing window. Nineteen (19) 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

• Mixed prices in pellet: Pellet (6-20 mm, Fe 62.5%) prices in Odisha's Barbil inched up by INR 100/t ($1/t) w-o-w to 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 27 December. BigMint's India pellet (Fe 63%, 3% Al) export index (FOB east coast) fell by $1.5/t w-o-w to $96/t on 27 December.
  
  
• Fines export prices fall w-o-w: BigMint's bi-weekly Indian low-grade iron ore fines (Fe 57%) export index decreased by $2.5/tonne (t) w-o-w to $62.5/t FOB east coast, India, on 26 December. The market saw muted trading activity due to a growing bid-offer disparity, with the discount for lower-grade fines widening to 20-21% on the global index (from 18-20% last week) following a lack of inquiries.
  
  
• Sponge iron prices fall w-o-w: According to BigMint's assessment, sponge iron C-DRI (FeM 80%) prices in Rourkela fell by INR 100/t ($2.5/t) w-o-w to INR 26,200/t ($306/t) on 28 December. Similarly, steel billet (100*100 mm) offers in Rourkela decreased INR 400/t ($5/t) w-o-w to INR 37,800/t ($442/t) today.
  
  

Outlook

According to BigMint analysis, iron ore prices are expected to be under pressure from their current levels owing to bids and offers disparity, along with cautious buying behaviour for new bookings. Trading activity may become more aggressive in the first week of the New Year, as private miners are likely to make slight relaxations in their offers.