Karnataka: Low-grade iron ore prices fall to 2-month low amid weak market sentiments

• Miners cut production as trades take a backseat
  
  
• Exports, sponge market continue to weigh on offers
  
  
• Prices to exhibit volatility in the near-term
  
  

Domestic low-grade iron ore fines (Fe 57%) prices witnessed a drop this week in Karnataka's Bellary. BigMint's weekly index for low-grade iron ore fines (Fe 57%) stood at INR 3,150/t ($38/t) ex-mines Bellary (excluding taxes), down by INR 100/t ($1/t) w-o-w. Notably, prices are hovering at around two-month low, according to data maintained with BigMint.

No active trades throughout the week along with negative sentiments from the export and sponge iron (CDRI) markets have put pressure on low-grade iron ore prices in Karnataka, BigMint observed.

"Some Karnataka miners have cut their output amid slow demand, weaker response in recent iron ore auctions," mentioned a major buyer from the region.

Rationale:

• Zero (0) trade was recorded in this publishing window and was accorded with 0% weightage.
  
  
• Thirteen (13) offers and indicative prices were reported, out of which ten (10) were considered as T2 trades receiving a 100% weightage.
  
  

Why Karnataka low-grade prices are under pressure?

• Bellary CDRI prices fall w-o-w: Sponge iron (CDRI) prices in Bellary, Karnataka fell by INR 400/t ($5/t) w-o-w. Low finished steel demand amid monsoon has weighed on CDRI prices.
  
  
• Weak export sentiments weigh on domestic prices: BigMint's weekly Indian low-grade iron ore fines (Fe 57%) export index decreased by $1.5/t w-o-w to $58.5/tonne (t) FOB east coast on 18 July, 2024. The significant drop in iron ore spot and future prices amid the lower steel demand in the Chinese market have weighed on export prices. However, buyers planned to purchase cargo at cheaper prices from India following cost-effectiveness and saving on the import margins.
  
  

Karnataka iron ore sales scenario (12-18 July, 2024)

Outlook

Domestic low-grade iron ore prices are likely to remain volatile, with uncertainty in price movement. However, any recovery in prices would depend on an improvement in the downstream market and a rebound in export demand.