SteelMint: Odisha iron ore fines index falls to four-months low post OMC's auction

SteelMint's weekly Odisha iron ore fines index (Fe 62%) fell sharply by INR 750/t w-o-w to INR 4,800/t ex-mines. Iron ore fines (Fe 62%) index has fallen to four-month low as this level was last seen in early Jan'22. Owing to the weak response in the recent OMC auction, deals of other miners have remained subdued. In addition to this, lower capacity utilization from sponge players amidst high coal prices have kept demand for iron ore slow.

Rationale:

• T1- OMC auction deals from Daitari and Jiling fines total around 30,000 t taken into consideration for Fe 62% fines calculation, hence, T1 trade is given 50% weightage. Rest material from other location has not taken into index calculation.
  
  
• T2- SteelMint received Eleven (11) offers and indicative prices under T2 trade deals in this publishing window out of which ten (10) were taken into consideration and were given 50% weightage. To check SteelMint's iron ore assessment, pricing methodology and specification documents Click here.
  
  

OMC iron ore lump auction receives weak response - Odisha Mining Corporation (OMC) had scheduled an iron ore fines and lumps auction on 19 May'22 in which out of a total 2.11 mn t only 1.47 mn t of material, 936,000 t fines (76%) and 538,000 lumps (61%) received bids. The bid prices in recent auction fell up to INR 1,550-1,650/t against last month's bid price.

As per the sources, Odisha iron ore prices may fall down further in the upcoming days considering weak response in OMC auction concluded recently this week.

Odisha iron ore prices:

Pellet and sponge iron prices fall further: Pellet prices in Durgapur have decreased by around INR 500/t, as per SteelMint's assessment. The current assessment for pellets (Fe 63%) stands at INR 9,000/t exw-Durgapur. India's pellet export market has continued to remain subdued in absence of firm bids from China. SteelMint's daily sponge iron, CDRI, index is assessed at INR 35,050/tonne (t) exw-Rourkela on 21 May 2022. On a w-o-w basis, the index fell by INR 950/t.

NMDC Chhattisgarh schedules iron ore auction on 24 May'22 - NMDC has scheduled two iron ore auctions from Chhattisgarh. The first auction is for 126,000 t of Fe 64%-67% (indicative) grade material from its Bacheli mines, while the second auction will see 67,200 t of Fe 64-65.5% (indicative) grade ore from the Kirandul mines going under the hammer. Both the auctions are scheduled for 24 May'22 and the material offered is DR-CLO, Baila lump, fines and ROM. Market sources expect NMDC to revise prices in the near short term.