SteelMint: Odisha iron ore index stable while market waits for OMC auction

Iron ore prices in India's largest iron ore producing state of Odisha remain unchanged for yet another week. SteelMint's weekly Odisha iron ore fines index (Fe 62%) has remained stable w-o-w, at INR 4,750/t ex-mines.

The majority of miners kept offers largely stable. However, market participants mentioned limited offers for high-grade ore (Fe 63%) in the market with a few mines having exhausted their EC limits. However, trades for medium-grade lump and fines were recorded by SteelMint this week.

Rationale:

• T1- A few deals were heard but only one deal for 80,000 t of Fe 62% fines was taken for the calculation of the index and given 50% weightage. 
  
  
• T2- SteelMint received ten (10) offers and indicative prices under T2 trades in this publishing window. Nine (09) were taken into consideration and given 50% weightage. To check SteelMint's iron ore assessment, pricing methodology, and specification documents Click here
  
  

Buyers are looking forward to the iron ore auction to be conducted by Orissa Mining Corporation (OMC) which is likely to take place on 15 Jan'22. Notably, OMC earlier used to conduct monthly auctions towards the first week of the month.

However, the state-owned miner seems to have changed the schedule to the middle of every month. With 13.3 mn t of iron ore production in FY'21, OMC emerged as the leading merchant miner in Odisha.

These auctions are also a price discovery mechanism for OMC. Around 70% of its output is sold to long-term customers, and the balance 30% is sold via auctions. However, the prices discovered at the auctions are applicable for long-term contracts, too.

Market highlights from other states:

Bids decrease at Karnataka e-auction: An auction was conducted on 31 Dec'21 by private miners for 797,220 t of out of 348,000 t was booked by buyers. JSW Steel Ltd. remained the largest buyer at 284,000 t followed by Vedanta at 28,000 t. Iron ore fines (Fe 57.5%) was booked at INR 2,092/t (basic, taxes extra), down INR 215/t against the previous auction on 21 Dec'21.

Goa govt plans to conduct 27th e-auction for 2.17 mn t of iron ore - The Directorate of Mines and Geology (DMG) of Goa plans to conduct the 27th e-auction for 2.17 mn t of iron ore. The material to be put to auction consists of fines, lumps, and run of mine (ROM) ore. In its last auction conducted for 1.57 mn t of iron ore on 31 Aug'21, about 0.81 mn t (52% of the total quantity) was booked.