- 2.6 mnt iron ore booked in OMC auction
- Material shortage forces buyers to place higher bids
- Limited offers seen from private miners
SteelMint's weekly Odisha iron ore fines (Fe 62%) index increased by INR 350/t to INR 5,850/t ex-mines on 20 January, 2024.
The Odisha iron ore market saw an uptick after active response from buyers in the recent OMC auction. Need-based buying was seen in the auction even as high-grade material shortage remains a problem owing to exhausted EC limits of small merchant mines.
OMC conducted an auction for 2.8 mnt of iron ore on 19 January. Buyers participated actively, and almost the entire quantity of fines (Fe 54-65%) was booked at INR 3,910-6,050/t while out of 1.241 mnt of iron ore lumps (Fe 58-64%), buyers booked 1.048 mnt at INR 4,750-7,850/t. Bids for fines and lumps increased by INR 100-1,000/t and INR 50-550/t against bid prices in the December 2023 auction. The miner had raised the base price by INR 350-400/t and INR 50-250/t m-o-m for fines and lumps for yesterday's auction.
An Odisha-based buyer said: "Iron ore fines shortage in the market forced buyers to bid higher in the OMC auction. As most small merchant miners are exhausting EC limits, the current OMC bid prices will drive the market".
A pellet-maker based in eastern India said that these bids were not viable for the plants that are far from the OMC mines adding the landed cost too, as pellet production cost will rise which is already on the higher side. Considering the sponge iron and finished steel prices, it is not easy for pellet-makers to raise their offers as buyers may not show interest.
According to sources, iron ore prices from traders and other merchant sellers may be revised next week. However, the market is now very complex after the OMC auction, while sponge iron and finished steel offers and sales are on a downtrend. However, iron ore lumps are preferred by sponge iron producers following the current pellet offers.
Rationale:
- T1- Four deals from OMC auction were considered in this publishing window under price computation. It was given 50% weightage for index calculation.
- T2- SteelMint received eight (8) offers and indicative prices under T2 trade deals in this publishing window. Seven (7) were taken into consideration and given 50% weightage. To check SteelMint's iron ore assessment, pricing methodology, and specification documents Click here.
Factors driving 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 9,100/t loaded to wagon. However, pellet (Fe 63%, 6-20 mm) prices in Durgapur inched down by INR 50/t w-o-w at INR 9,750/t exw on 19 January.
- Declining fines export prices: SteelMint's weekly Indian low-grade iron ore fines (Fe 57%) export index declined by $5/tonne (t) w-o-w to $83/t FOB east coast on 18 January. Sluggish seaborne buyers' response and blast furnace maintenance have dropped the Indian offers in the overseas market. The export market will face two three-week challenges due to the Lunar holiday.
- Rourkela sponge iron prices fall w-o-w: SteelMint's assessment for sponge iron C-DRI (FeM 80%) prices in Rourkela slightly decreased by INR 300/t to INR 26,700/t exw on 20 January compared to last week. Steel billet (100*100 mm) prices in Rourkela fell by INR 300/t w-o-w to INR 38,650/t. The booking at lower offers had a cause in prices dropped.
Outlook
Other Odisha-based merchant miners are likely to increase offers following bids received in the OMC auction on 19 January.
