India: SteelMint's Odisha iron ore fines index remains firm on material shortage

• Domestic iron ore prices supported by export deals
  
  
• Higher grade material shortage in Odisha as small miners exhausting EC limit
  
  

SteelMint's weekly Odisha iron ore fines (Fe 62%) index remained stable at INR 5,500/t ex-mines on 6 January, 2024. No bulk deals were witnessed for standard Fe62% fines in this publishing window.

Iron ore fines prices remained in the higher side in the Odisha region following the active low-grade export deals and higher-grade material shortage. In addition, iron ore miners EC limit is also getting exhausted. As per sources, hike in pellet offers, sponge and finished steel prices have also kept iron ore prices firm in the Odisha region.

An Odisha-based buyer said: "Eastern region facing higher grade material shortage. Only a few selective miners are selling Fe60+% fines in the market which is also at higher prices with using the material for their captive plants also. We had booked iron ore 2-3 months back from a merchant miner but the dispatch is still pending which is clearly showing material scarcity in Odisha."

However, few sources said that most buyers had booked sufficient material in the OMC auction and currently remained sidelined. On the other hand, few small plants booking material at higher prices from traders also and wherever they are getting material.

A miner said: "We have already sold the material for the next two months and will dispatch in the last quarter of FY24. The miners and traders are aggressively exporting the lower grade fines at decent offers which created a fines scarcity in the market. However, most buyers booked material in the OMC auction which generally sold 3 mnt monthly through the auction."

Rationale:

• T1- No deal was considered in this publishing window under price computation. It was given 0% weightage for index calculation.
  
  
• T2- SteelMint received seventeen (17) offers and indicative prices under T2 trade deals in this publishing window. Fourteen (14) were taken into consideration and given 100% weightage. To check SteelMint's iron ore assessment, pricing methodology, and specification documents Click here.
  
  

Factors driving Odisha iron ore prices:

• Barbil pellet prices largely stable w-o-w: Pellet (6-20 mm, Fe 63%) prices in Odisha's Barbil decreased marginally by around INR 100/t w-o-w. The current assessment stands at INR 9,300/t loaded to wagon. However, pellet (Fe 63%, 6-20 mm) prices in Durgapur remained stable w-o-w at INR 10,000/t exw on 5 January.
  
  
• Rising iron ore fines export prices: SteelMint's weekly Indian low-grade iron ore fines (Fe 57%) export index increased by $2/tonne (t) w-o-w to $95/t FOB east coast on 4 January 2023. Four deals for export around 220,000 t of standard Fe (55-57%) fines were recorded for China at $92-97/t FOB in this publishing window. However, another deal of 30,000 t fines (Fe51-56%) were recorded from western India to GCC in the last one week.
  
  
• Rourkela sponge iron prices rise w-o-w: SteelMint's assessment for sponge iron C-DRI (FeM 80%) prices in Rourkela slightly increased by INR 250/t to INR 27,550/t exw on 6 January compared to last week. Steel billet (100*100 mm) prices in Rourkela rose by INR 400/t w-o-w to INR 39,300/t. However, prices significantly fell today amid sluggish market.
  
  

Outlook

Odisha's iron ore prices are expected to remain supportive in the near term amid material shortage owing to exhausting EC limits and decent export deals. However, the sponge and finished steel in the region may impact iron ore prices.