Iron ore concentrate prices witnessed a sharp fall this week. SteelMint’s index for Fe 63% concentrate prices currently stands at around INR 4,700/tonne (t) exw, down INR 700/t, w-o-w. The bid-offer disparities and drop in pellet and steel prices post-export duty announcement have lowered offers for iron ore concentrates. Market participants have adopted a wait-and-watch mode till next week for price clarity.
Meanwhile, NMDC’s recent price cut has also pulled down prices. Notably, the miner has decreased prices of iron ore fines by INR 750/t and DR-CLO by INR 720/t. Prices have fallen to around four-month low.
Factors weighing on iron ore concentrate prices-
- Export duty announcement: In a highly significant development late on 21 May, the government imposed hefty export duties on steel and steelmaking raw materials and intermediaries in a bid to preserve higher domestic supplies and control rising prices. Export duties on iron ore of all grades and pellets have been fixed surprisingly high at 50% and 45%, respectively. Market participants are depressed over the sudden imposition of duty and anxious about the future course of action.
- Falling pellet prices on low bids: SteelMint’s bi-weekly domestic pellet (Fe 63%) index, PELLEX, stood at INR 9,000/tonne (t) DAP Raipur on 24 May, down by around INR 1,100/t compared to the last assessment on 20 May. Notably, the index fell to around one-and-a-half-year low after the announcement of the export duty. Many pellet makers have kept offers on hold and are reviewing the market scenario while most of the buyers across the region are either out of the market or silent on any price offer.
- Iron ore fines prices fall to four-month low: SteelMint’s weekly Odisha iron ore fines index (Fe 62%) fell sharply by INR 750/t w-o-w to INR 4,800/t ex-mines, hitting a four-month low as this level was last seen in early-January. Owing to the weak response in the recent OMC auction, deals of other miners remained subdued. In addition, lower capacity utilisation from sponge players amidst high coal prices kept iron ore demand slow.
- Arrival of imported concentrate cargoes: Import bookings of iron ore concentrates were heard recently. An Indian steel major concluded an import deal for around 75,370 t from USA, according to vessel line-up data maintained with SteelMint. The shipment is scheduled for end-May at Paradip Port.
Outlook
Iron ore concentrate prices are likely to remain under pressure post-export duty announcement by the Indian government.
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