SteelMint: Odisha iron ore fines index falls close to one-year low

SteelMint's weekly Odisha iron ore fines (Fe 62%) index fell sharply by another INR 700/tonne (t) to INR 5,050/t (ex-mine, including royalty, DMF and NMET). The index has fallen close to one-year low compared to INR 4,800/t since early-Nov'20. Lowering bids, falling pellet prices and expectations of price cut by Odisha based miners have resulted in a drop in the index.

SAIL had conducted an auction for 60,000 t of iron ore fines (Fe 62.5%-Indicative) from its Bolani mines in Odisha on 24 Sept. The base price for the material offered was INR 5,900/t FOR inclusive of royalty, DMF, NMET and the additional amount mentioned in the MMDR Amendment Act. According to latest updates, the tender failed to fetch any response due to bid-offer disparities.

State-owned miner Odisha Mining Corporation (OMC) has scheduled iron ore lumps and fines e-auction on 1 Oct'21. About 781,000 t of iron ore lumps and 942,000 t fines are put up for auction. The base price of material is yet to be disclosed. Key takers expect significant reduction in base price in this auction.

Although key merchant miners have not lowered offers officially but market sources highlighted that discounts are being given at quoted offers and also deals are being concluded at INR 5,000/t (ex-mine, including royalty, DMF and NMET).

Rationale:

• No deals were recorded this week and therefore not considered as T1 trade and was given 0% weightage in the index calculation for Fe 62% fines.
  
  
• SteelMint received twelve (12) offers, indicative prices under T2 trade in this publishing window. Nine (09) were taken into consideration and given 100% weightage. To check out SteelMint's iron ore assessments, pricing methodology and specification documents Click here
  
  

SteelMint's iron ore lump (5-18mm, Fe 63%) index fell to INR 9,800-10,000/t (ex-mines, including royalty, DMF and NMET), lower by INR 300-500/t on a weekly basis. However, a deal was concluded for 2,000-3,000 t (10-30, Fe 61 lumps) at INR 6,900/t (ex-mines, including royalty, DMF and NMET) by an Odisha based trader this week.

NMDC's iron ore auction from Chhattisgarh fetches tepid response:

India's largest iron ore miner, National Mineral Development Corporation (NMDC), had scheduled two iron ore auctions from its Chhattisgarh mines on 24 Sep'21. According to market sources, the auctions received subdued response, with the iron ore fines lot fetching no participation and the lump and DR-CLO lots fetching a marginal premium of INR 100/t over the set base price, as per SteelMint reports.

NMDC Kumaraswamy auction receives soft response:

NMDC conducted an iron ore e-auction on 23 Sep'21 from Kumarswamy mines at which 58,000 t was booked out 356,000 t.

• JSW emerged as the largest buyer at 52,000 t followed by Saivijay Pragathi Steel Udyog Pvt Ltd. at 4,000 t.
  
  
• A iron ore fines* (Fe 60.6%) lot was booked at INR 3,615/t (basic, taxes extra), a decline of INR 1,066/t compared to the previous auction.

  *corrected - Fines was wrongly written as lumps