Steel Authority of India Ltd. (SAIL) sold around 300,000 t of iron ore fines at auctions in Oct’21 from its integrated steel plants in the country, as per data maintained with SteelMint. Sales volumes at iron ore auctions in the month remained stable vis-à-vis Sep.
Oct sales stable, m-o-m
However, total volumes remaining unsold at the auctions from the iron ore mines under the Rourkela Steel Plant (RSP) and Bhilai Steel Plant (BSP) in Chhattisgarh were around 230,000 t in Oct. This figure, which includes low-grade dump fines, is far lower compared to 650,000 t of unsold material in Sep that comprised around 67% of the total material offered at auctions during the month.
Sales volumes in Sep and Oct remained at similar levels, although demand remained somewhat subdued – as evinced from the 25% fall in merchant iron ore dispatches in Odisha in Sep. Nevertheless, sales increased compared to Jul-Aug, SteelMint data shows.
SAIL pays the government an additional amount of 150% of existing royalty on sale of iron ore fines from its captive mines through auctions. Total sales have reached nearly 4 mn t this year.
Marginal improvement in prices
Weak participation at SAIL’s iron ore auctions in Sep were due to bid-base price disparities, and iron ore fines prices remained under pressure. NMDC reduced prices of fines (Fe 64%) by INR 400/t in the beginning of Oct.
Only about 24% of the 942,000 t of iron ore fines (Fe 60-62%) put on auction by State-owned OMC on 1 Oct received bids at the base prices.
But tight merchant supplies in Odisha and lack of offers for high-grade iron ore kept prices supported in Oct. In addition, domestic pellet prices got a leg up in the beginning of Oct due to rising sponge iron ore and semi-finished steel prices. Pellet prices inched up from below INR 11,000/t in Raipur, central India, to nearly INR 12,300/t in early-Oct.
As a result, a marginal improvement in prices at SAIL auctions was witnessed in Oct. The auction for 136,000 t of iron ore fines (Fe 62.5%) from the Bolani mines in Odisha on 27 Oct, for example, received bids that were higher by INR 200/t against the last auction on 7 Oct. Around 12,000 t of fines were offered at INR 6,100/t and another 124,000 t at INR 6,050/t (loaded on to wagon, including royalty and other statutory levies).
Likewise, prices of Fe 60.5% iron ore auctioned from the Barsua mines were at INR 5,200/t towards end-Oct – stable compared to prices at auctions earlier in the month.
Availability issues kept SteelMint’s Odisha iron ore fines index (Fe 62%) supported at over INR 6,000/t levels towards the latter half of Oct. Supply concerns for high-grade material and rising finished steel prices are expected to buoy iron ore prices going forward which, in turn, could boost greater allocations by SAIL.
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