- OMC auction likely to be scheduled next week
- Global iron ore prices drop $9/t w-o-w
- Limited offers from Odisha merchant miners as they edge closer to exhausting EC limits
SteelMint's weekly Odisha iron ore fines (Fe 62%) index remained stable at INR 5,500/t ex-mines on 13 January, 2024.
The Odisha iron ore market remained muted this week as no major trading activity was witnessed. Market participants remained sidelined and cautious about booking material as the pellet and sponge iron markets saw a drop in offers.
However, a few sources said that most buyers were waiting for the next OMC iron ore auction which may be scheduled sometime next week. Buyers are expecting some base price revision by OMC.
An Odisha-based buyer said: "The market is facing lack of clarity as iron ore prices are on the higher side while sponge and steel offers have dropped. Pellet and iron ore export prices have also decreased amid sluggish response from buyers in the seaborne market".
A miner source said: "the EC limit was exhausted and a slight shortage of material was seen in the market and in response miners offered material at higher prices. However, iron ore price trends will become clearer after the OMC auction."
According to some steelmaker sources, the sharp decrease in global iron ore prices may encourage imports of high-grade fines. However, users are waiting for prices to drop further in the import market.
Rationale:
- T1- No deal was considered in this publishing window under price computation. It was given 0% weightage for index calculation.
- T2- SteelMint received sixteen (16) offers and indicative prices under T2 trade deals in this publishing window. Thirteen (13) 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 9,200/t loaded to wagon. However, pellet (Fe 63%, 6-20 mm) prices in Durgapur decreased by INR 200/t w-o-w at INR 9,800/t exw on 12 January.
- Iron ore import bookings likely to pick-up: With global iron ore prices witnessing a sharp drop, import bookings of fines are learned to have gained momentum. India's iron ore imports were recorded at 4.98 mnt in CY'23 against 1.44 mnt in CY'22.
- Declining fines export prices: SteelMint's weekly Indian low-grade iron ore fines (Fe 57%) export index declined by $7/tonne (t) w-o-w to $88/t FOB east coast on 11 January. Iron ore fines offers in the overseas markets fell sharply this week following the sharp drop in spot and futures prices in China. Buyers remained cautious about booking material at higher offers this week. Notably, the benchmark Fe 62% fines index fell by $9/t to $131/t CFR China on 12 January due to lower steel margins and shutdown of Chinese steel mills.
- 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 550/t to INR 27,000/t exw on 13 January compared to last week. Steel billet (100*100 mm) prices in Rourkela fell by INR 350/t w-o-w to INR 38,950/t. Steel prices have been dropping amid soft demand amid a lack of projects.
Outlook
Iron ore price trends in Odisha are yet to emerge clearly. However, pressure from pellet, sponge, and steel players may force PSU merchant miners to revise the base prices for upcoming auction.
