SteelMint: Odisha iron ore index falls on easing supplies, falling pellet prices

SteelMint's weekly Odisha iron ore fines index (Fe 62%) has edged down further by INR 150/tonne (t) w-o-w to INR 6,000/t ex-mines. Drop in pellet prices and the recent decline in sponge iron prices kept a majority of buyers away from making a new round of bookings for iron ore.

Rationale:

• T1- Steel Authority of India Ltd (SAIL) conducted an auction on 30 March, 2022 for 40,000 t of iron ore fines (Fe 62.5%-indicative) from its Bolani iron ore mines in Odisha. The company received bids for the entire material at INR 5,950-6,000/t (including royalty, DMF and NMET), down INR 840/t against the last auction on 24 February. This deal has been considered under T1 after all necessary adjustments and given a weightage of 50%.
  
  
• T2- SteelMint received eleven (11) offers and indicative prices under T2 trades in this publishing window. Seven (7) were taken into consideration and given 50% weightage. To check SteelMint's iron ore assessment, pricing methodology, and specification documents Click here
  
  

Factors impacting iron ore prices

• Easing supplies: With the beginning of this new financial year, merchant miners will have their fresh environmental clearances (EC limits) in place. Thus, supplies from the small miners who had exhausted their limits will be seen in the market. Also, Vedanta subsidiary Electrosteel Steels Ltd (ESL) is likely to start offering iron ore in the merchant market from April, 2022, sources informed SteelMint. The company commenced production from both the Nadidih BICO and Nadidih Feegrade mines that it won at the auctions in Odisha last year. The two mines have geological resources of 27 million mnt and 23.6 mnt respectively.
  
  
• Pellet prices decline by INR 1,200/t w-o-w: Pellet prices in Durgapur have decreased, as per SteelMint's assessment. The current assessment for pellets (Fe 63%) stands at INR 11,000/t exw-Durgapur, down INR 1,200/t compared with prices seen a week ago. India's pellet export market has continued to remain inactive for yet another week which has weighed down domestic prices. Chinese players are learned to be preferring sinters over pellets, which has kept them away from placing any firm bids for seaborne cargoes. SteelMint's India pellet (Fe 63%, 3% Al) export index (FOB east coast) stands at $152/t.
  
  
• Sponge prices correct downwards: SteelMint's daily sponge iron, CDRI, index is assessed at INR 40,150/tonne (t) (- INR 50) exw Rourkela on 2 Apr'22. On w-o-w basis, the index has fallen by INR 600/t.
  
  

Highlights from other states:

NMDC hikes iron ore prices by up to INR 200/t ($3/t): NMDC has raised iron ore list prices by up to INR 200/t yesterday for April, 2022 deliveries.

• Baila lump (6-40mm, Fe 65.5%) - INR 6,100/t (+100/t)
  
  
• DR CLO (10-40mm, Fe 67%) - INR 7,320/t (+120/t)
  
  
• Baila fines (Fe 64%) - INR 5,160/t (+200/t)
  
  
• Prices are on FOR basis, excluding royalty and taxes. Notably, royalty rates for January, 2022 have come down compared with December, 2021.
  
  

Bids fall in recent Karnataka iron ore e-auction by private miners: Karnataka's private miners had conducted an iron ore e-auction on 30 March, 2022 in which 76,000 t of material was booked out of a total of 251,000 t. JSW Steel emerged as the largest buyer at 28,000 t followed by Rai Bahadur Seth Shreeram Narasingdas Private Limited and Prakash Sponge Iron and Power Pvt Ltd at 16,000 t each. The iron ore lumps (Fe 64%) lot was booked at INR 5,969/t (basic, taxes extra) down INR 200/t as against the last auction at 25 February, 2022.