India: Odisha iron ore fines index records marginal decline after OMC auction

• Over 2.5 mnt iron ore receives bids in OMC auction
  
  
• Miners yet to revise offers post OMC auction
  
  
• Market participants waiting for price clarity
  
  

Iron ore fines prices in Odisha remained under pressure post OMC auction, while lumps prices remained unchanged this week. The merchant miners in the state are yet to revise their iron ore offers.

BigMint's Odisha iron ore fines (Fe 62%) index decreased by INR 100/t ($1/t) w-o-w, settling at INR 4,200/t ($50/t) ex-mines as of 24 August, 2024. Over the past week, around 200,000 tonnes (t) of iron ore by the private miners post OMC auction.

In OMC's auction for 1.515 mnt of iron ore fines (Fe 54-65%) on 20 August, the entire quantity was booked at INR 2,020-4,500/t. While in the lumps auction, out of 1.072 mnt of iron ore lumps (Fe 58-64%), the buyers booked 1.068 mnt (99% of the offered quantity) at INR 3,350-6,200/t. Bids (weighted avg) decreased around INR 500/t for the fines while lumps remained stable compared to last month. Notably, the company has reduced base prices m-o-m by up to INR 200/t in lumps and INR 100-350/t for fines.

As per sources, major buyers secured iron ore at the auction. Market participants are now holding off on further deals, eagerly awaiting price clarity before committing to additional purchases. As a result, the state saw no significant deals this week, reflecting the cautious sentiment among buyers as they navigate the uncertain pricing environment.

Market participants are expecting some prices reduction by the miners as bids had fallen in the OMC auction. A few miners made transection at old offers this week.

Rationale:

• T1- Three (3) deals of Fe 62% fines was recorded from OMC auction in this publishing window and two (2) considered for price computation. These were given 50% weightage for index calculation.
  
  
• T2- BigMint received fifteen (15) offers and indicative prices under T2 offers, indicative and bids in this publishing window. Twelve (12) 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 supportive w-o-w: Pellet (6-20 mm, Fe 62.5%) prices in Odisha's Barbil remained unchanged w-o-w. The current assessment stands at INR 7,100/t ($85/t) loaded to wagon. Pellet (Fe 62.5%, 6-20 mm) prices in Durgapur recorded stable w-o-w at INR 7,850/t ($93/t) exw on 23 August. BigMint's India pellet (Fe 63%, 3% Al) export index (FOB east coast) increased by $4/t w-o-w to $91/t on 23 August.
  
  
• Fines export prices stable w-o-w: BigMint's weekly Indian low-grade iron ore fines (Fe 57%) export index remained stable w-o-w at $54/t FOB east coast on 22 August 2024. The market remained silent with no major trades concluded by the Indian iron ore exporters.
  
  
• 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 25,900/t ($308/t) on 24 August. Meanwhile, steel billet (100*100 mm) prices in Rourkela also recorded stable w-o-w at INR 37,650/t ($448/t) today.
  
  

Outlook

According to BigMint's analysis, iron ore prices are expected to remain volatile as major miners will revise their offers next week. Iron ore fines offers may remain under pressure after the OMC auction.