SteelMint: Odisha iron ore index falls further post-OMC auction results

Domestic iron ore prices in India have continued to remain under pressure on declining pellet offers and lowering bids. SteelMint's weekly Odisha iron ore fines and lumps indexes have fallen by INR 100- 500/tonne (t), w-o-w. SteelMint's index for Fe 62% fines stood at INR 5,100/t ex-mines, down by INR 100/t w-o-w.

OMC's e-auction receives subdued response: Odisha Mining Corporation (OMC) had scheduled iron ore fines auction on 3 Dec'21. Out of the total 1.18 mn t put to the auction, only 15% (166,000 t) received bids. The auction received flat bids i.e. in line with the base price. The state-run miner had cut the base price for fines by up to INR 1,000/t against the last auction on 2 Nov.

Out of the total 800,000 t of lump put to the auction by OMC, only 52% (417,000 t) received bids. The majority of the lots received flat bids i.e. in line with the base price except those of Guali and Jiling mines which registered a hike in bids by upto INR 2,100/t. Notably, bid prices have come down by INR 500-2,300/t against bid prices of the previous auction held in Nov'21.

Domestic pellet prices fall sharply: As per SteelMint data, pellet prices in Odisha's Barbil have fallen by around INR 1,200/t, w-o-w to INR 8,000/t loaded to wagons. Prices have hit the lowest level in one year.

Rationale:

• A deal for Fe 62-64% fines from OMC Koira was recorded for 28,000 t at INR 5,200/t (ex-mines, (inlcu. Royalty, DMF and NMET) considered as T1 trade after grade adjustment and given 50% weightage in the index calculation for Fe 62% fines.
  
  
• SteelMint received around eleven (11) offers and indicative prices under T2 trades in this publishing window. Seven (07) were taken into consideration and given 50% weightage. To check SteelMint's iron ore assessment, pricing methodology, and specification documents Click here
  
  

Highlights from other key states -

• NMDC iron ore lump prices drop to 8-month lows:
  
  

PSU miner NMDC has cut iron ore prices sharply by INR 200-870/t for Dec'21 deliveries, SteelMint learnt from sources. Lumps prices witnessed a comparatively sharper correction than fines. After the price cut, the miner's lump offers have hit an eight-month low.

FoR Prices, excluding Royalty, DMF & NMET

• Bids by private miners decline at Karnataka iron ore auction
  
  Bids inched down at the Karnataka iron ore e-auction conducted on 03 Dec'21 by private miners, as per reports. The auction fetched bids for 140,000 t of iron ore out of 444,000 t. JSW Steel remained the largest buyer at 112,000 t followed by Vedanta Limited at around 20,000 t. Bids for iron ore fines (Fe 57.5%) offered by Vedanta Ltd. decreased to INR 2,316/t as against INR 2,450/t at the previous auction conducted on 19 Nov'21.