India: Odisha iron ore fines index falls to over 1.5-year-low on limited trades

• Iron ore prices remain under pressure in the region w-o-w
  
  
• Pellet prices drop by INR 100-300/t in the central-eastern region
  
  
• Prices receive support from the sponge and iron ore export market
  
  

BigMint's Odisha iron ore fines (Fe 62%) index decreased by INR 100/t ($1/t) w-o-w, settling at INR 4,100/t ($49/t) ex-mines as of 31 August 2024. The index has plummeted to a twenty-month low, last seen in November 2022. Over the past week, deals of around 315,000 tonnes (t) of iron ore were closed by private miners in Odisha.

Iron ore prices in the Odisha region remained uncertain, as miners are yet to revise the offers for fresh deals. However, a few miners selling at INR 100-200/t lowered prices from last week. Trading activity remained moderate, as major buyers had already purchased sufficient material in the August Odisha Mining Corporation (OMC) auction and remained cautious about new transactions.

Market sources said that iron ore prices in the region have fallen by around INR 100-200/t for both fines and lumps, but buying interest remained tepid this week.

A miner noted that they are offering discounts on bulk deals at earlier prices. August's heavy rains have affected production, and demand is moderate, as major central-eastern steelmakers have sourced material from the OMC auction. The source added that they are monitoring the market and will reassess iron ore offers in the next two to three weeks.

A pellet producer from Odisha said that pellet prices fell by around INR 200-300/t in central India, and currently, the profit margin is very low. This may put pressure on miners for a reduction in iron ore prices in the near term. However, some improvement in domestic steel prices may balance out the market dynamics with raw material prices.

Rationale:

• T1 - No deals of Fe 62% fines were recorded from merchant miners in the publishing window. As a result, this was not considered for price computation. This was given a 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. Nineteen (19) 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 drop, export index up w-o-w: Pellet (6-20 mm, Fe 62.5%) prices in Odisha's Barbil fell by INR 50/t w-o-w. The current assessment stands at INR 7,050/t ($84/t) loaded to wagon. Pellet (Fe 62.5%, 6-20 mm) prices in Durgapur dropped by INR 150/t w-o-w to INR 7,700/t ($92/t) exw on 30 August. BigMint's India pellet (Fe 63%, 3% Al) export index (FOB east coast) increased by $4/t w-o-w to $95/t on 30 August with active export deals.
  
  
• Fines export prices up w-o-w: BigMint's weekly Indian low-grade iron ore fines (Fe 57%) export index increased by $4.5/t w-o-w to $58.5/t FOB east coast on 29 August. Despite the price improvement, no major transactions were concluded by exporters during this period owing to a bid-offer disparity.
  
  
• Sponge iron prices stable w-o-w: BigMint's assessment for sponge iron C-DRI (FeM 80%) prices in Rourkela remained largely stable w-o-w at INR 26,000/t ($310/t) on 31 August. Meanwhile, steel billet (100*100 mm) prices in Rourkela were also recorded to be stable w-o-w at INR 37,700/t ($449/t) today.
  
  

Outlook

According to BigMint's analysis, iron ore prices are expected to remain under pressure following the current pellet and sponge prices in the region. Private miners may reduce some prices in the near term, which may boost buying interest.