India: Weak response to OMC's auction drags down iron ore concentrate prices to nearly 4-month low

Iron ore concentrate prices in Jabalpur, central India, saw a downtrend this week amid a correction in Odisha iron ore fines prices after the Odisha Mining Corporation's (OMC's) recent iron ore auction received subdued response.

SteelMint's index for Fe 63% concentrate currently stands at around INR 5,000-5,100/tonne (t) exw, a fall of INR 150/t as against the last assessment on 20 May, 2023. Prices have fallen to nearly a four-month low, data shows.

Rationale:

• Two (2) deals for 20,000 t and 12,000 t were heard concluded at INR 4,900/t and INR 5,300/t exw, respectively and both were taken into consideration as T1 trade for index calculation and were given 50% weightage.
  
  
• Four (4) offers and indicative prices were reported and all were taken into consideration as T2 trade and accorded the balance 50% weightage.
  
  

Factors weighing on iron ore concentrate prices-

• Weak response to OMC's fines auction: At OMC's 746,000 t of iron ore fines (Fe 54-64%) auction held on 18 May, 2023 from Jilling mines, only 16,000 t (Fe 55-58%) were booked at the base price of INR 2,500/t. SteelMint understands that the drop in pellet production amidst squeezed margins and fall in exports have resulted in buyers showing less interest at this auction.
  
  
• Odisha iron ore fines prices fall w-o-w: SteelMint's weekly Odisha iron ore fines (Fe 62%) index decreased by INR 200/t to INR 5,400/t ex-mines on 20 May compared to the last assessment on 13 May. As per sources, buyers expected more reduction in OMC's base prices for the iron ore auction, however prices were reduced by up to INR 650/t only. Curtailed pellet output and limited trading also kept iron ore prices under pressure.
  
  

Outlook

With iron ore prices falling in Odisha amid the volatile market, iron ore concentrate prices might remain under pressure, SteelMint understands.