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India: Odisha iron ore fines index falls INR 200/t w-o-w on fragile downstream demand

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Fines/Lumps
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20 Jul 2024, 15:03 IST
India: Odisha iron ore fines index falls INR 200/t w-o-w on fragile downstream demand

  • Over 100,000 t of deals concluded in Odisha this week

  • Market under pressure due to weak downstream demand

  • Less-than-aggressive bidding observed in OMC's ongoing auction

BigMint's Odisha iron ore fines (Fe 62%) index dropped by INR 200/tonne (t) w-o-w to INR 4,300/t ($50/t) ex-mines on 20 July, 2024. No Fe 62% fines deals were recorded in this publishing window. A total of 110,000 t of other grades of iron ore direct sales from merchant miners were recorded by BigMint in Odisha this week.

Iron ore prices in Odisha remained largely stable this week. A few deals were concluded with relaxation in offer prices. The major steelmakers remained in a wait-and-watch mode as they were waiting for the OMC auction before proceeding with further bulk purchases.

Odisha Mining Corporation (OMC) has scheduled an auction for around 2.54 mnt of iron ore (1.06 mnt of lump ore and 1.49 mnt of fines) on 20 Jul'24. The company has reduced base prices m-o-m by INR 150-250/t for lump and INR 700-800/t for the majority of fines lots. The continuous drop in pellets, sponge and steel prices forced miners to decrease base prices for the upcoming auction.

However, buying interest from other traders was reportedly sluggish amid soft market sentiments. Pellet, sponge iron and finished steel prices were under pressure which kept buyers away from fresh bookings. Downturn in sentiments in the seaborne iron ore and pellet markets also impacted trading in the Odisha market.

A miner said: "We kept our iron ore prices stable this week but only a few deals were seen. Buyers inquired actively about iron ore fines but their bids remained lower against our offers while a few sponge producers booked iron ore lump. Major buyers are waiting for OMC's auction and were in no hurry to buy iron ore. We will revise our offers next week after the OMC auction results. Overall, iron ore demand has been poor in Odisha this week."

A pellet producer commented that the market will attain price clarity next week with revisions in offers of the major miners. As per sources, iron ore demand in Odisha has dropped following weak trends in the downstream steel market. The bids in today's OMC auction may remain poor due to lower buying interest in the market. The next few days' market dynamics will driven by the bids received in OMC's auction.

Rationale:

  • T1- Two (2) deals of Fe 62% fines were recorded in this publishing window and considered only one for price computation. These were given 50% weightage for index calculation.

  • T2- BigMint received twenty three (23) offers and indicative prices under T2 trade deals in this publishing window. Sixteen (16) were taken into consideration and given 50% weightage. To check BigMint's iron ore assessment, pricing methodology, and specification document Click here

Market highlights:

  • Domestic and export pellet prices under pressure: Pellet (6-20 mm, Fe 62.5%) prices in Odisha's Barbil remained stable w-o-w w-o-w. The current assessment stands at INR 7,500/t ($94/t) loaded to wagon. Pellet (Fe 62.5%, 6-20 mm) prices in Durgapur remained stable w-o-w at INR 8,400/t ($107/t) exw on 19 July. BigMint's India pellet (Fe 63%, 3% Al) export index (FOB east coast) decreased by $5/t w-o-w to $97/t on 19 July 2024.

  • Fines export prices stable w-o-w: BigMint's weekly Indian low-grade iron ore fines (Fe 57%) export index inched down by $0.5/t w-o-w at $58.5/tonne (t) FOB east coast on 18 July 2024. An exporter said that a deal for around 55,000 t of Fe 57% fines was concluded from the East Coast at a 25-26% discount in this publishing window. Another fines (Fe 54-55%) deal was heard concluded by an eastern India-based exporter a couple of days back. The deals could not be confirmed at the time of publishing this assessment.

  • Sponge iron prices drop w-o-w: BigMint's assessment for sponge iron C-DRI (FeM 80%) prices in Rourkela fell by INR 200/t w-o-w to INR 26,050/t ($306/t) on 20 July. Meanwhile, steel billet (100*100 mm) prices in Rourkela dropped INR 400/t ($5/t) w-o-w to INR 38,400/t ($462/t) today.

Outlook

Iron ore prices in Odisha may fall next week after the price revision by miners. The expectation of a drop in m-o-m bids in OMC's auction is weighing on prices.

A participant at OMC's iron ore auction informed BigMint that buyers' response has remained weak. In the ongoing auction, only an INR 200-300/t premium over the base price has been received amid a perceptible lack of aggression in bidding observed till the publication of this assessment.

20 Jul 2024, 15:03 IST

 

 

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