Sales of iron ore fines at auctions conducted by state-owned steelmaker SAIL dropped a straight 80% on the month to just 60,000 tonnes (t) in Nov’21 from 300,000 t in Oct, as per month-wise data maintained with SteelMint.
Importantly, merely 16% of 360,000 t of material offered at SAIL iron ore auctions in Nov was booked, as bids at the auctions from SAIL’s captive mines in Odisha were at variance vis-à-vis the base prices set for the material on offer.
Total iron ore allocation for auctions also dwindled in Nov, as more than 450,000 t of iron ore had been allocated for auctions by SAIL in Oct. One key reason was nil allocations from SAIL-BSP’s captive mines in Chhattisgarh. SAIL officials told SteelMint that allocations were stopped due to low realisation at auctions compared to finished product sales. However, allocations could resume in Dec, they assured.
Significantly, only iron ore dump fines (Fe 60.5%-indicative) and tailings (Fe 59.8%) received bids at the auctions in Nov, with iron ore fines (Fe 60%) auctions from the Barsua mine in Odisha failing to attract any participation.
Downtrend in prices
The dismal sales scenario at SAIL auctions in the past month reflects a declining market, as the rapid fall in pellet prices amidst weak export sentiments weighed on iron ore prices.
In addition, India’s iron ore production increased significantly since Sept and increasing supplies are expected to exert more pressure on prices.
SteelMint’s Odisha iron ore fines index fell all through the month, with Odisha miners reducing prices.
At OMC’s iron ore fines auction in the beginning of Nov, about 70% of the material on offer had been booked at a base price which had been reduced by INR 650/t compared to earlier OMC auctions.
Prices edged lower at SAIL auctions too. Dump fines and tailings were booked at INR 4,000-4,200/t in Nov, as per SteelMint data. This price includes royalty, DMF, NMET and additional premium.
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