India: Odisha iron ore fines index marginally fall amid weakening steel market sentiments

• Miners offering discounts of INR 200-300/t
  
  
• Pellet, sponge iron prices drop w-o-w
  
  
• NMDC reduces iron ore prices for August deliveries
  
  

Iron ore fines prices in Odisha remained under pressure this week and iron ore lumps prices decreased w-o-w. Mixed steel market dynamics and a drop in NMDC prices kept iron ore prices lower in Odisha.

BigMint's Odisha iron ore fines (Fe 62%) index inched down by INR 50/t ($0.5/t) w-o-w at INR 4,450/t ($56/t) ex-mines on 10 August, 2024. The merchant miners concluded around 15,000 t of iron ore fines (Fe61-62%) deals at INR 4,350-4,600/t this week. Meanwhile, over 100,000 tons of deals of iron ore across grades (fines + lumps) were recorded from Odisha in the last one week.

A miner said: "Buyers are waiting for the OMC auction and deals have dropped on a w-o-w basis. We sold some quantities but buyers' interest was low amid the downtrend in pellets and steel prices. A few steelmakers from neighbouring states inquired about material but their bids remained low. Over the past few days, only low-grade iron ore demand was witnessed in the market while other steelmakers remained cautious and opted for a wait-and-watch approach. We have relaxed offers with a view to concluding deals this week."

Notably, miners offered an INR 200-400/t discount on current offers due to softening prices and market sentiments. No bulk deal was heard this week from Odisha.

A source commented that a few buyers believed that prices would drop further in the state over the coming days and refrained from concluding deals. On the other hand, the iron ore export market was also under pressure due to the lower price levels amid the lack of active deals. Major miners are only offering in the domestic market.

NMDC decreased its list prices of iron ore CLO (calibrated lump ore) and fines by INR 600/t($7) and INR 500/t ($6), respectively. The company's prices are effective from 7 August. The miner has fixed prices of DR CLO (10-40mm, Fe67%) at INR 6,420/t ($76/t) and of iron ore fines (-10mm, Fe64%) at INR 4,610/t ($55/t) on FOR basis from its Bacheli complex. Prices include royalty, DMF and NMET. Fines prices have hit a 10-month low as these price levels were last seen in October 2023, as per BigMint data.

Rationale:

• T1- Two (2) deals of Fe 62% fines were recorded from merchant miners in this publishing window and considered for price computation. These were given a 50% weightage for index calculation.
  
  
• T2- BigMint received Twenty-seven (27) offers and indicative prices under T2 offers, indicative and bids in this publishing window. Twenty-four (24) 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:

• Pellet prices under pressure: Pellet (6-20 mm, Fe 62.5%) prices in Odisha's Barbil fell by INR 150/t w-o-w. The current assessment stands at INR 7,200/t ($86/t) loaded to wagon. Pellet (Fe 62.5%, 6-20 mm) prices in Durgapur inched down by INR 200/t ($2.5/t) w-o-w to INR 7,900/t ($94/t) exw on 9 August. BigMint's India pellet (Fe 63%, 3% Al) export index (FOB east coast) remained stable w-o-w at $93/t on 9 August.
  
  
• Fines export prices up w-o-w: BigMint's weekly Indian low-grade iron ore fines (Fe 57%) export index decreased by $1/tonne (t) w-o-w to $57/t FOB east coast on 8 August. No export deal was heard for Fe57% as major sellers have remained cautious amid the lower price level. Some sellers expected a premium on single mine cargo but failed to attract buyers due to the downtrend in the market in recent days.
  
  
• Sponge iron prices fall w-o-w: BigMint's assessment for sponge iron C-DRI (FeM 80%) prices in Rourkela fell by INR 400/t ($5/t) w-o-w to INR 25,600/t ($305/t) on 10 August. Meanwhile, steel billet (100*100 mm) prices in Rourkela dropped INR 1,000/t ($12/t) w-o-w to INR 37,100/t ($442/t) today.
  
  

Outlook

As per BigMint's analysis, iron ore prices in the Odisha region may be sustainable at the current level in the next week before the OMC base prices announcement of the August auction. However, deals may fall in the next week as buyers will opt for a wait-and-watch mode to get price clarity in the OMC auction.