Karnataka: Low-grade iron ore prices fall to one-year low, market awaits auction outcomes for clarity

• Miners under pressure amid sluggish trades
  
  
• Exports, sponge, pellet market weigh on offers
  
  
• Buyers expecting further price reductions
  
  

Domestic low-grade iron ore fines (Fe 57%) prices witnessed a significant fall this week in Karnataka's Bellary. BigMint's weekly index for low-grade iron ore fines (Fe 57%) stood at INR 2,700 tonne (t) ($32/t) ex-mines Bellary (excluding taxes), a drop of INR 400/t ($5/t), w-o-w.

Absence of active trades amid bearish sentiments in the export as well as domestic markets has forced miners to pull down their offers. In the same line, a Bellary-based buyer told BigMint, "Miners have reduced their offers because the export market is at standstill and they are forced to dump their materials to pellet players who are not ready to buy at the previous levels amid weak market sentiments. Also, auctions are also not getting active responses as major lots are getting unsold while lots sold were more or less at base prices."

"Another reason behind the drop is that miners have to sell their mined quantities even when the market is in a downtrend. So offers have suddenly fallen," said a Bellary-based miner.

Meanwhile, the market is eagerly waiting for the upcoming auctions and better price clarity from NMDC's Donimalai base price revision. Buyers are expecting a price cut post-the company's recent price drop announcement. Talking about the same, another major miner from the region said, "Other miners are under pressure due to NMDC. Demand is there but no production due to the monsoons and weak market sentiments in the downstream segment are weighing on iron ore prices. Everybody wants the raw material but not willing to buy at the current quoted offers."

Rationale:

• Zero (0) trade was recorded in this publishing window and hence, accorded 0% weightage.
  
  
• Twelve (12) offers and indicative prices were reported, out of which ten (10) were considered as T2 trades, receiving 100% weightage.
  
  

What factors forced miners to drop offers?

• NMDC CG cuts iron ore prices for Aug dispatches: NMDC CG decreased list prices of iron ore calibrated lump ore (CLO) and fines by INR 600/t ($7/t) and INR 500/t ($6/t), respectively, BigMint learnt from sources. The company's prices are effective from 7 August, 2024. The miner has fixed prices of DR CLO (10-40 mm, Fe 67%) at INR 6,420/t ($76/t) and of iron ore fines (-10 mm, Fe 64%) at INR 4,610/t ($55/t) on FOR basis from its Bacheli complex. Prices include royalty, DMF and NMET charges. Notably, fines prices have hit ten-month low as these levels were last seen in October, 2023, data maintained with BigMint showed.
  
  
• Bellary C-DRI prices down w-o-w: Sponge iron (CDRI) prices in Bellary, Karnataka fell by INR 450/t ($5/t) w-o-w. Prices decreased due to limited buying influenced by slow movement in the semi-finished and finished steel segments.
  
  
• Low-grade export market under pressure: BigMint's weekly Indian low-grade iron ore fines (Fe 57%) export index decreased by $1/t w-o-w to $57/t FOB east coast on 8 August, 2024. Indian iron ore fines export prices remained range-bound this week due to lack of deals in the seaborne market. Buyers demanded 24-26% discount on the global index but prominent exporters remained cautious and opted for a wait-and-watch mode before closing deals.
  
  

Karnataka iron ore sales scenario (2-8 August, 2024)

Outlook

Domestic low-grade iron ore prices are likely to remain volatile, with uncertainty in price movement. However, market sentiments are expected to improve post-monsoon in the region, one of the buyers told BigMint. "Trades will pick up further post-monsoon as miners will start production actively which will improve the supply side," the buyer said. Meanwhile, the market is awaiting NMDC's Donimalai price revision and upcoming iron ore auctions for better clarity.