State-owned Steel Authority of India Ltd (SAIL) has achieved total iron ore sales of 552,000 tonnes (t) through auctions conducted in Jun’21. Iron ore sales volumes increased slightly compared with 530,000 t in May, SteelMint data shows. However, realisations improved for the state-run steelmaker what with tight availability of iron ore in the market driving prices higher.
Mines under SAIL’s Raw Materials Division (RMD) in Odisha – Bolani and Barsua – witnessed combined sales at 440,000 t in Jun, while sales from iron ore mines under the Bhilai Steel Plant (BSP) in Chhattisgarh were recorded at 112,000 t – roughly stable month-on-month (m-o-m).
High-grade ore at a premium
Iron ore sales included fresh fines as well as dumps and tailings. High-grade iron ore auctions triggered active response, as per SteelMint reports. For instance, 24,000 t of iron ore fines from the Dalli mines in Chhattisgarh received bids at INR 7,900/t (loaded, including royalty, DMF, NMET and the additional royalty cited in the MMDR Amendment Act) on 4 Jun, as per sources. The material put under the hammer was Fe 64.34% and Fe 64.66% grade.
Similarly, an auction for 136,000 t of Fe 62.5% grade iron ore from the company’s Bolani mine in Odisha received bids for 80,000 t at INR 9,530/t on 21 Jun. The rest was booked at INR 9,540/t (loaded), SteelMint learnt from sources. Likewise, 28,000 t of iron ore concentrates (Fe 64.8%) received bids at around INR 8,120/t at an auction from Chhattisgarh on 26 Jun. It was reported that bids moved up by INR 150-180/t for Fe 60%-Fe 60.8% grade material at auctions from both Odisha and Chhattisgarh.
SteelMint’s weekly index for Odisha iron ore fines (Fe 62%) was assessed at INR 9,600/t (ex-mines, including royalty, DMF and NMET) on 3 Jul. The index increased by around INR 200/t against the last assessment. The factors believed to be pushing the index higher are the onset of monsoon and evacuation issues. Tight material availability, especially for downstream users without captive mines, is supporting prices.
Outlook
With SAIL now likely to resume iron ore auctions from its mines in Jharkhand, it could be expected that sales volumes will gradually increase in the coming months. Since SAIL started iron ore auctions in May’20, the only month that saw auctions being held from Jharkhand was Dec, with a total of 288,000 t getting sold from the Kiriburu and Meghahatuburu mines in the state. Interestingly, total sales volumes had crossed 0.8 mn t in that month – the highest on record with the sole exception of Mar’21.
With prices continuing to remain stiff and supply concerns simmering in the market, the PSU steel major could be looking to boost iron ore sales in the coming months, SteelMint notes.
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