Karnataka: Low-grade iron ore prices remain under pressure amid muted trade
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- Miners cut production as trades take a backseat
- Exports, sponge market, monsoon 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 3,100/t ($37/t) ex-mines Bellary (excluding taxes), down by INR 50/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 amid monsoon in the region along with weak 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 low demand and weaker response in recent iron ore auctions," mentioned a major Bellary-based buyer.
Another buyer from the region said, "No active offer has been witnessed currently as there is lack of material amid monsoon as rain water can be traced in the mines."
Rationale:
- No trade was recorded in this publishing window and accorded with 0% weightage.
- Seventeen (17) offers and indicative prices were reported, out of which fifteen (15) 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 500/t ($6/t) w-o-w. Low finished steel demand amid monsoon continues to weigh 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 $2/t w-o-w to $56.5/t FOB east coast on 25 July, 2024. The sea market prices for the Indian lower grade fines dropped this week following fall in iron ore fines spot and future prices due to lower demand in the Chinese market. The buyers demanded around 25-26% discount on the global fines index which was not viable for the Indian sellers.
Karnataka iron ore sales scenario (19-25 July, 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 as one of the buyer told BigMint, "Trades will rebound post monsoon as miners will start production actively which will improve the supply side."
