India: SteelMint's Odisha iron ore fines index falls by INR 100/t, market awaits OMC auction

SteelMint's weekly Odisha iron ore fines (Fe 62%) index decreased by INR 100/t w-o-w to INR 5,000/t ex-mines on 14 October, 2023 compared to the last assessment on 7 October. No deal was reported for the high-grade in this publishing window.

Miners are currently offering lower-grade material due to less availability of medium-higher-grade fines. As per sources, miners have limited quantity of medium and higher-grade fines as they are facing difficulties in mining operations. However, most of the buyers remained silent and waited for clear market direction.

Some market participants informed: "The current market dynamics is unpredictable and all are waiting for the October month's auction which is expected to be scheduled next week. Buyers are expecting some revision in the base price from OMC as the current sponge and finished steel markets are on a downtrend which has put pressure on the production cost of the material."

However, OMC has yet not released the notification for the auction of October. In last month's auction, iron ore fines bids were higher by up to INR 850/t.

Rationale:

• T1- No deal was reported and not considered for price calculation this week. They were given 0% weightage for index calculation.
  
  
• T2- SteelMint received eleven (11) offers and indicative prices under T2 trade deals in this publishing window. Eight (8) were taken into consideration and given 100% weightage. To check SteelMint's iron ore assessment, pricing methodology, and specification documents Click here.
  
  

Factors weighing on Odisha iron ore prices:

• Pellet prices fall on lower demand: Pellet prices in Odisha's Barbil fell by INR 50/t compared to last week. The current assessment stands at INR 8,550/t loaded to wagons this week. A drop of INR 150/t was seen in raw pellet (Fe63%, 6-20 mm) prices in Durgapur, which were assessed at INR 8,900/t exw on 13 October. Pellet demand remained muted this week.
  
  
• Sponge prices down in Rourkela: SteelMint's assessment for sponge iron C-DRI (FeM 80%) prices in Rourkela decreased by INR 700/t to INR 30,600/t exw on 14 October compared to last week. However, d-o-d sponge iron prices increased by INR 200/t. Billet prices declined by INR 1,000/t w-o-w to INR 42,000/t exw-Rourkela on 14 October.
  
  

Outlook

Odisha's iron ore market may remain under pressure. The market will be clearer only after the OMC's auction for October. However, availability of fines material is still a concern.