India: Iron ore sales at SAIL e-auctions drop by over 100,000 t in Feb’21

PSU steel-maker SAIL’s iron ore sales at periodic e-auctions in Feb’21 reversed down to 576,000 t against 700,000 t in Jan’21 and nearly 750,000 t in Dec’20. Total iron ore sales at auctions since May’20 stands at a little over 3.97 mn t, as per SteelMint data.

A majority of the iron ore allocation – almost 440,000 t – was from Bolani and Barsua, the company’s captive mines in Odisha under the Raw Materials Division (RMD). In addition, SteelMint reported another auction of 80,000 t of iron ore dumps (Fe56%) from the Taldih mine in Odisha on 25 Feb’21.

The Rajhara iron ore mine under the Bhilai Steel Plant in Chhattisgarh sold 56,000 t of iron ore fines during the month. The latest auction from Rajhara was reported on 26 Feb’21 at which out of an allocated 84,000 t of iron ore fines only 28,000 t (Fe60.37%) received bids.

SAIL’s iron ore production in Feb’21 was assessed at 3.25 mn t. According to latest reforms proposals spelt out by the Ministry of Mines, SAIL – like other non-auctioned captive miners – could be allowed to sell 50% of total annual iron ore production in the open market by paying an “additional amount” of 1.5 times that of the royalty for iron ore fines.

Prices under pressure

Iron ore prices at SAIL e-auctions continue to remain under pressure with improving supplies throughout the country, especially from Odisha. For instance, bids dropped by INR 770/t at the Barsua auctions on 23 Feb’21 for 104,000 t of iron ore fines (Fe60.8%). SteelMint assesses the weighted average price for Fe62.5% fines from the company’s Bolani mine in Odisha at INR 3,820/t in Feb’21 compared to INR 4,850/t in Jan’21. This is largely in sync with the INR 900/t m-o-m drop in SteelMint’s benchmark Odisha iron ore fines index.

PSU miner NMDC too has slashed fines prices (Fe64%) by INR 600/t to INR 4,210/t in Feb’21 from its mines in Chhattisgarh. SteelMint assesses that the weighted average price of SAIL’s Dalli-Rajhara iron ore fines (Fe60-61%) has corrected downwards to INR 3.350/t vis-à-vis INR 3,860/t in Jan’21.

Iron ore production in Odisha crossed the 12 mn t mark in Jan’21. The country’s total monthly production exceeded the 20 mn t level for the first time in Dec’20 and is likely to remain at that level for the rest of the fiscal. Production returning to pre-pandemic levels is likely to exert further pressure on iron ore prices, SteelMint understands.