India: SAIL iron ore auctions a washout in May as govt slaps export duty

Iron ore auctions held by state-owned SAIL in May 2022 failed to attract any participation as the domestic steel raw material market remained in a bear grip after the government imposed 50% export duty on iron ore across grades and a steep 45% tariff on pellets exports on 22 May, SteelMint understands.

Iron ore and pellet prices crashed in the domestic market on apprehension of surplus availability and a sharp decline in prices in the absence of exports, with buyers deferring iron ore lifting as steel prices slipped at a fast pace.

This led to zero interest among buyers towards booking volumes at auctions held by SAIL and other Odisha-based merchant miners.

India's largest iron ore miner NMDC cut prices up to INR 750/t towards the end of May. While fines prices were reduced by INR 750/t, lump ore or DR-CLO prices were slashed by INR 720/t. Prices fell to four-month lows, as per SteelMint assessment.

SteelMint reported that the 40,000 t iron ore fines (Fe 62.5% indicative) auction from SAIL's Bolani mines in Odisha on 27 May failed to fetch any response. The 40,000 t iron ore dump fines (Fe 59% indicative) auction from Bolani for which the base price was INR 2,350/t ex-mines (including royalty, DMF, NMET and additional premium) failed to elicit response.

In terms of total iron ore sales at auctions in FY'22, the company's Odisha mines had the majority share with over 85%.

The state-owned steel major has captive iron ore production capacity, as per EC limit, of nearly 60 mnt, although production was recorded at 33.7 mnt in 2021.