India: Odisha iron ore fines index falls INR 350/t ($4/t) post-OMC auction
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- Around 2.4 mnt iron ore booked in OMC auction
- Lack of aggression in OMC bidding by buyers
- Export and domestic iron ore prices under pressure
BigMint's weekly Odisha iron ore fines (Fe 62%) index prices decreased by INR 350/t ($4/t) w-o-w at INR 4,750/t ($58) ex-mines on 23 March 2024. One deal of Fe62% fines recorded this week other than OMC auction from Odisha.
Iron ore prices in Odisha witnessed a drop this week following bids dropping post OMC auction. Participants anticipate gaining clarity on prices post Holi festival. However, supply side expected to increase next month with the fresh EC limits of miners.
Few miners in Odisha offered the material as they still have material in the stock amid lack of buying interest. The ongoing prices of pellet and fines in the overseas market also impacted Indian domestic market. The domestic miner like NMDC also dropped the iron ore prices recently post lower bids in the OMC auction.
OMC conducted an auction for 2.9 mnt iron ore auction on 19 March, 2024. Around 1.461 mnt of fines (Fe 54-64%, 86% of total 1.692 mnt offered quantity) were booked at INR 3,100-5,000/t. The buyers booked 958,000 t (Fe 58-62%, 78% of the 1.23 mnt offered quantity) lumps at INR 4,300-6,900/t. Buyer's interest remained slowed and bids dropped for the majority of lots against last month. Bids for fines have decreased by INR 400-950/t for few lot but INR 200-600/t for majority of fines and lumps against last month's bids.
An Odisha-based miner said, "Export prices have also experienced downward pressure, led the buyer reluctancy for participation in the auction. This downturn is evident from the fact that only 85% of the available quantity got booked, with increased in bids of INR 100-200/t against the base price".
Rational:
- T1- Four deals were taken from Odisha in this publishing window and all has been taken for price computation. These were given 50% weightage for index calculation.
- T2- BigMint received tweenty two (22) offers and indicative prices under T2 trade deals in this publishing window. Eleven (11) were taken into consideration and given 50% weightage. To check BigMint's iron ore assessment, pricing methodology, and specification document Click here.
Other factors for drop in prices-
- Pellet offers fall in domestic, export markets: Pellet (6-20 mm, Fe 62.5%) prices in Odisha's Barbil inched down by around INR 50/t ($1/t) w-o-w. The current assessment stands at INR 7,900/t ($94.5/t) loaded to wagon. Pellet (Fe 62.5%, 6-20 mm) prices in Durgapur fell by INR 350/t ($4/t) w-o-w to INR 8,500/t ($105/t) exw on 22 March. BigMint's India pellet (Fe 63%, 3% Al) export index (FOB east coast) decreased by $1.5/tonne (t) to $96/t on 20 March 2024. The pellet export market dropped this week amid sluggish sentiment and lack of demand from Chinese buyers.
- Export offer continue to drop: BigMint's weekly Indian low-grade iron ore fines (Fe 57%) export index fell by $3.5/t w-o-w to $58.5/t FOB east coast on 21 March 2024. No deals were heard for Fe 57% fines as buyers demanded around the range of 18-20% discount to conclude the deals. The lower-grade fines prices in the export market witnessed a drop amid a lack of buying interest from buyers. The overseas buyers were looking for cheaper material following a sluggish import margin, which was not feasible for Indian sellers. The discount had widened for Fe 57% fines.
- Sponge iron prices edge up in Rourkela: BigMint's assessment for sponge iron C-DRI (FeM 80%) prices in Rourkela rose by INR 200/t ($2.4t)w-o-w to INR 26,500/t ($320/t). Meanwhile, steel billet (100*100 mm) prices in Rourkela increased by INR 300/t ($4/t)w-o-w to INR 38,700/t ($470/t) yesterday.
Outlook
Iron ore prices in Odisha are likely to remain range-bound in the coming days amid Holi festival and towards the end of financial year ending followed by sluggish approach from buyers. However, the miners said that they will get new EC from the April 2024.
