Karnataka: Low-grade iron ore prices remain stable on weaker market sentiments

• NMDC reduces base price by around INR 400/t in auctions
  
  
• Weak export market sentiments weigh on bids
  
  

Domestic low-grade iron ore fines (Fe 57%) prices remained unchanged in Karnataka's Bellary. BigMint's weekly index for low-grade iron ore fines (Fe 57%) stood at INR 3,250/t ($39/t) ex-mines Bellary (excluding taxes), remaining stable w-o-w. Limited trades were recorded in this publishing window. NMDC's recent price reducing announcement 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.

Iron ore prices in the Bellary region have remained stable, primarily due to limited trades by steelmakers who are exercising caution in their purchasing decisions. This cautious approach comes amid a continuous drop in sponge iron and finished steel prices in southern India this week. Reflecting the downward market sentiment, major miner NMDC has reduced its base prices.

According to a buyer, "Only one or two miners are currently offering low-grade material in the market. Despite this limited availability, the recent NMDC Kumaraswamy and Donimalai auctions received a good response, with buyers booking the entire quantity. This trend indicates that buyers are keen to secure their supplies through auctions, preferring to avoid the volatile market conditions driven by a weak downstream market."

Rationale:

• One (1) trade of 40,000 t was recorded in this publishing window and was accorded with 50% weightage.
  
  
• Eleven (11) offers and indicative prices were reported, out of which seven (7) were considered as T2 trades receiving a 100% weightage.
  
  

Market highlights from Karnataka:

• NMDC cuts iron ore prices by INR 400/t: NMDC Karnataka has announced list prices of iron ore from its Donimalai mines on 8 July, 2024. Revised prices of fines (-10 mm, Fe 59%) stand at INR 3,703/t ($44/t), down by INR 398/t ($5/t) while lumps (10-40 mm, Fe 59%) prices are at INR 4,268/t ($51/t), down by INR 383/t ($5/t). Prices include royalty, DMF and NMET.
  
  
• Weak export sentiments weigh on domestic prices: BigMint's weekly Indian low-grade iron ore fines (Fe 57%) export index decreased by $4/t w-o-w to $59/tonne (t) FOB east coast on 11 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.
  
  
• Bellary CDRI prices fall w-o-w: Sponge iron (CDRI) prices in Bellary, Karnataka fell by INR 500/t ($6/t) w-o-w. Low finished steel demand amid monsoon has weighed on CDRI prices.
  
  

Karnataka iron ore sales scenario (5 July-11 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.