India: Odisha iron ore fines index falls INR 50/t ($0.5/t) post-OMC auction
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- New offers from pvt miners likely next week
- Pellet prices under pressure post-OMC auction
The iron ore market in Odisha displayed mixed trends following the recent auction from the Odisha Mining Corporation (OMC). Prices for fines were under pressure due to the uncertainty about the offers from miners and weak pellet prices in the eastern region. Lump prices showed an upward trend, indicating strong interest from domestic buyers. Market participants are now eagerly awaiting new price announcements from private miners, which are anticipated next week.
BigMint's Odisha iron ore fines (Fe 62%) index dropped by INR 50/t ($0.5/t) w-o-w to INR 5,300/t ($63/t) ex-mines on 23 November 2024. Deals remained in muted mode this week as buyers purchased material from OMC's auction while remaining cautious about the private miners' prices going ahead.
OMC conducted an auction of approximately 2 million tonnes (mnt) of iron ore, (0.87 mnt of lumps and 1.15 mnt of fines) on 20 November. Following the positive response from steelmakers, the entire quantity was sold at INR 3,050-7,600/t. However, bids (weighted average) decreased around INR 300/t against last month's auction while remaining largely stable for lumps. The miners reduced lump base prices by INR 950/t m-o-m but kept iron ore fines prices stable.
A buyer from Odisha informed, "We saw a strong response for lumps during the auction, reflecting increased interest from both steelmakers and sponge iron manufacturers. However, the fines bids dropped against last month but overall premium remained decent against the base prices."
Another miner commented, "Private players are taking a cautious approach and are likely waiting for clearer cues from the global market before announcing new offers. Next week's price updates will provide much-needed clarity on market direction."
Some sources have said there is a material shortage in the region, as private miners have already overbooked iron ore while dispatches of their old contracts are still pending. Steelmakers may receive price clarity next week after new offers from the miners.
Rationale
- T1 - Three (3) deals of Fe62% fines were recorded in the publishing window. Two (2) were considered for price computation and were given a 50% weightage for index calculation.
- T2 - BigMint received sixteen (16) offers and indicative prices under the T2 category (offers, indicative, and bids) in this publishing window. Nine (9) 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 pellet prices drop, exports up w-o-w: Pellet prices in the domestic and export markets remained under pressure this week. Pellet (6-20 mm, Fe 62.5%) prices in Odisha's Barbil fell by INR 300/t ($4/t) w-o-w to INR 8,100/t ($96/t) loaded to wagon. Pellet (Fe 62.5%, 6-20 mm) prices in Durgapur inched done by INR 100/t ($1/t) w-o-w to INR 9,600/t ($114/t) exw on 22 November. BigMint's India pellet (Fe 63%, 3% Al) export index (FOB east coast) rose by $3/t w-o-w to $92.5/t on 22 November.
- Fines export prices rise w-o-w: BigMint's bi-weekly Indian low-grade iron ore fines (Fe 57%) export index increased by $2/t w-o-w to $61/t FOB east coast, India, on 21 November. This rise can be attributed to positive market trends and some deals that have concluded this week so far. The spot and futures prices of iron ore fines also helped improve market sentiments.
- Sponge iron prices stable w-o-w: According to BigMint's assessment, sponge iron C-DRI (FeM 80%) prices in Rourkela remained stable w-o-w at INR 26,800/t ($318/t) on 23 November. Meanwhile, steel billet (100*100 mm) offers in Rourkela increased by INR 300/t ($4/t) w-o-w to INR 37,650/t ($447/t) today.
Outlook
According to BigMint analysis, there may be better clarity on iron ore prices in Odisha next week by when steelmakers are expecting fresh offers from miners.
