India: Odisha iron ore fines index falls as market awaits OMC auction outcome

• Buyers remain cautious about raw material purchases
  
  
• Falling pellet, sponge prices may weigh on iron ore offers
  
  

Raw material prices in the Odisha region experienced a slight decline this week. Steelmakers have been cautious with their purchases, awaiting the outcome of the OMC iron ore auction. The market is expected to gain clarity on raw material prices following the auction, as it faced pressure from falling sponge and finished steel prices.

BigMint's Odisha iron ore fines (Fe 62%) index decreased by INR 150/t ($2/t) w-o-w, settling at INR 4,300/t ($51/t) ex-mines as of 17 August, 2024. Over the past week, more than 100,000 tonnes (t) of iron ore, including both fines and lumps, were traded from Odisha.

A miner commented: "Market participants are eagerly anticipating the OMC iron ore auction, scheduled for August and likely to take place next week. Our offers have remained relatively stable compared to last week, with only a few deals in iron ore lumps. Pellet producers have been frequently inquiring about mid to high-grade fines recently. We plan to adjust our iron ore offers based on the auction results and market dynamics."

A source said that some buyers believe prices in the state may decline further in the coming days and have thus held off on concluding deals. Meanwhile, the iron ore and pellet export market is also experiencing pressure due to lower price levels and lack of active deals.

Rationale:

• T1- No deals of Fe 62% fines was recorded from merchant miners in this publishing window and considered for price computation. These were given 0% weightage for index calculation.
  
  
• T2- BigMint received Twenty-four (24) offers and indicative prices under T2 offers, indicative and bids in this publishing window. Twenty-two (22) were taken into consideration and given a 100% weightage. To check BigMint's iron ore assessment, pricing methodology, and specification document Click here
  
  

Market highlights:

• Pellet prices under pressure: Pellet (6-20 mm, Fe 62.5%) prices in Odisha's Barbil fell by INR 100/t w-o-w. The current assessment stands at INR 7,100/t ($85/t) loaded to wagon. Pellet (Fe 62.5%, 6-20 mm) prices in Durgapur inched down by INR 50/t ($0.5/t) w-o-w to INR 7,850/t ($93/t) exw on 16 August. BigMint's India pellet (Fe 63%, 3% Al) export index (FOB east coast) significantly decreased by $5/t w-o-w to $88/t on 16 August.
  
  
• Fines export prices down w-o-w: BigMint's weekly index for Indian low-grade iron ore fines (Fe 57%) exports fell by $3/tonne (t) w-o-w, reaching $54/t FOB east coast on 14 August. The market has been quiet, as Indian sellers have stayed away due to lower deal prices. These prices are not viable considering the higher domestic ex-mines prices and the added costs of logistics and port charges.
  
  
• Sponge iron prices up w-o-w: BigMint's assessment for sponge iron C-DRI (FeM 80%) prices in Rourkela rose by INR 400/t ($5/t) w-o-w to INR 26,000/t ($309/t) on 17 August. Meanwhile, steel billet (100*100 mm) prices in Rourkela dropped by INR 600/t ($7/t) w-o-w to INR 37,700/t ($449/t) today.
  
  

Outlook

According to BigMint's analysis, iron ore prices in the Odisha region are expected to gain clarity after the OMC auction next week. Merchant miners may adjust their offers based on the results of the auction.