SteelMint: Odisha iron ore fines index rises further on pellet price support

SteelMint's weekly Odisha iron ore fines index (Fe 62%) has risen by INR 300/tonne (t) w-o-w to INR 6,500/t ex-mines. Hike in pellet prices, limited availability of high-grade ore and logistics concerns amidst limited availability of rakes kept iron ore prices supported.

Rationale:

• T1- No confirmed deal was heard this week as majority of big buyers have their scheduled deliveries pending from previous OMC, SAIL auctions.
  
  
• T2- SteelMint received nine (9) offers and indicative prices under T2 trades in this publishing window. Eight (8) were taken into consideration and given 50% weightage. To check SteelMint's iron ore assessment, pricing methodology, and specification documents Click here

  

  Factors supporting price hike:
  
  

• Paucity of high-grade ore - With the fiscal end approaching, a majority of small merchant miners have exhausted their EC limits and are not actively offering material in the market.
  
  
• Hike in pellet prices - Pellet prices in Odisha's Barbil increased this week. The current assessment for iron ore pellets (Fe 63%) stands at INR 12,100/t loaded on to wagon, up INR 600/t against 1 Mar'22. Hike in pellet export prices amid increased EU inquiries has boosted domestic offers.
  
  
• Logistics concerns - Market participants highlighted rake availability issue which delayed the material delivery of previous orders.Sources expect miners to lift offers next week; however, a steep hike looks less likely on capacity ramp ups in the near term.
  
  

Highlights from other states:

• NMDC sold over 600,000 t of iron ore at Donimalai auction: The total quantity got sold out at NMDC's iron ore auction for over 600,000 t from the Donimalai mines in Karnataka on 4 Mar'22. JSW Steel was the largest buyer at 504,000 t followed by BMM Ispat at 80,000 t. The iron ore lumps (Fe 62.2%) lot was booked at INR 3,714/t (basic, taxes extra), up INR 135/t compared to the previous auction on 8 Feb.