India: Odisha iron ore fines index rises INR 400/t ($5/t) post-OMC auction

• Iron ore offers rise by INR 400-600/t w-o-w
  
  
• Around 3 mnt sold in OMC's auction
  
  
• Aggressive bookings seen for pre-monsoon restocking
  
  

BigMint's weekly Odisha iron ore fines (Fe62%) index increased by INR 400/t ($5/t) w-o-w to INR 5,400/t ($65/t) ex-mines on 25 May, 2024. No deals for fines from merchant miners were recorded this week except OMC's auction.

Active bids in OMC's auction and sharp rise in offers by other merchant miners have supported iron ore prices in Odisha.

OMC conducted an auction for around 3 mnt on 21 May from Odisha. The entire quantity of 1.807 mnt of iron ore fines (Fe 54-65%), was booked at INR 4,220-6030/t. For the 1.19 mnt of iron ore lumps (Fe 58-65%) auction, buyers successfully bid for around 1.05 mnt at INR 4,850-7,850/t.

Bids in the auction increased by around INR 300-1,000/t and INR 150-1,300/t, respectively, against the set base prices for fines and lumps. Notably, the company has increased base prices m-o-m by up to INR 550-580/t for the high-grade lots in both fines and lumps. All prices are on ex-mines basis including royalty, DMF and NMET.

A source told BigMint that aggressive buying in OMC's auction for pre-monsoon restocking drove premiums higher. Major miners in Odisha have already opened their offers in the market and after OMC's auction others may revise offers next week in a bid to test the market mood.

A trader from Odisha said, "Trading activity in the region is low because most of the steelmakers have already booked the volumes they needed in OMC's auction. Some buyers are holding off for now because there is uncertainty about prices in the market."

In recent news, the Indian Ministry of Environment, Forest and Climate Change has granted an environmental clearance (EC) to Jilling Langalotta iron ore mine of OMC to enhance production from 6.28 mnt/year (ROM) to 10 mnt/year (ROM).

Rationale:

• T1- Two (2) deals were recorded in this publishing window but not taken for price computation. These were given 0% weightage for index calculation.
  
  
• T2- BigMint received twenty- seven (27) offers and indicative prices under T2 trade deals in this publishing window. Twenty-five (25) were taken into consideration and given 100% weightage. To check BigMint's iron ore assessment, pricing methodology, and specification document Click here
  
  

Market highlights:

• Pellet offers rise w-o-w: Pellet (6-20 mm, Fe 62.5%) prices in Odisha's Barbil increased by INR 500/t w-o-w. The current assessment stands at INR 9,200/t ($110/t) loaded to wagon. Pellet (Fe 62.5%, 6-20 mm) prices in Durgapur increased by INR 400/t ($5/t) w-o-w to INR 10,100/t ($121/t) exw on 24 May. Meanwhile, BigMint's India pellet (Fe 63%, 3% Al) export index (FOB east coast) increased by $5.5/tonne (t) w-o-w to $109/t on 22 May.
  
  
• Fines export offers up on active deals: BigMint's weekly Indian low-grade iron ore fines (Fe 57%) export index rose by $3.5/t w-o-w to $68.5/tonne (t) FOB east coast on 23 May. Around 135,000 t of Fe57% fines deals were concluded by Indian sellers in this publishing window. A major miner from Odisha also concluded 110,000 t of Fe54% fines deals at $68/t CFR China a few days back. Meanwhile, one more deal of around 55,000 t (Fe57% fines) was heard at $84/t CFR China but could not be confirmed by sellers.
  
  
• Sponge iron prices fall w-o-w in Rourkela: 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 30,000/t ($360/t) on 25 May. Meanwhile, steel billet (100*100 mm) prices in Rourkela dropped by INR 200/t ($3/t) w-o-w to INR 43,200/t ($516/t) today.
  
  

Outlook

Iron ore offers in Odisha are expected to remain supportive in the coming weeks as pre-monsoon restocking is expected to continue coupled with positive momentum in the iron ore export market.