India: OMC iron ore lumps auction receives decent response, fines bids flat

State-owned miner Odisha Mining Corp (OMC) had scheduled an e-auction for iron ore fines and lumps today (3 Dec'21). Around 800,000 t of iron ore lumps and 1.1 mn t of fines were put up for auction from OMC's mines. The miner had cut the base price for fines by up to INR 1,000/t and that of lumps by up to INR 850/t against the last auction on 2 Nov'21.

Out of the total 800,000 t of lump put to auction, only 52% (417,000 t) received bids. The majority of the lots received flat bids i.e. in line with the base price except those of Guali & Jiling which registered hike in bids by upto INR 2,100/t. Notably, bid prices have come down by INR 500-2,300/t against bid prices of the previous auction held in Nov'21.

Reasons behind the drop in bids:

• Competitive pellet offers impact lump prices: Domestic pellet prices slipped due to weakening sponge iron prices, following the sharp drop in coal import prices over the last one-and-a half months as well as deteriorating exports sentiments. Pellet prices in Odisha's Barbil have come down, as per latest reports. SteelMint's current assessment for iron ore pellets (Fe 63%) stands at INR 8,000/t, loaded on to wagon, down around INR 4,500/t m-o-m. As a result, sponge iron producers are likely to increase sourcing of pellets owing to a sharp fall in prices, which is simultaneously pressuring iron ore lump prices.
  
  
• Odisha iron ore lump prices drop: SteelMint's Odisha iron ore lump (5-18mm, Fe 63%) index has fallen to INR 9,500/t, a decrease of INR 1,500/t m-o-m. Leading miners in India's key iron ore production hub of Odisha have reduced offers recently.
  
  
• Imports spurt on falling global prices: Domestic iron ore prices may head further south as imports have become viable on the back of a sharp correction in global iron ore prices. Iron ore imports to India have resumed after a gap of ten months in Nov'21 and were recorded at 102,100 t, as per data maintained with SteelMint. Entire volumes of imports were those of South African lumps.
  
  

OMC's fines auction fetches flat bids

The miner had scheduled iron ore fines auction today. Out of the total 1.18 mn t of material put to auction, only 15% (166,000 t) received bids. The auction received flat bids i.e. in line with the base price.

With 13.3 mn t of iron ore production in FY'21, OMC had emerged as the leading merchant miner in Odisha.