India: Iron ore concentrate prices fall to over four-month low amid weak sentiments

Iron ore concentrate prices continued the downward trend this week. SteelMint’s index for Fe 63% concentrate prices currently stands at around INR 3,750/tonne (t) exw, down INR 50/t, w-o-w. Prices hit over a four-month low, data maintained with SteelMint shows. Few offers were even heard around INR 3,500/t exw levels.

Bid-offer disparities, NMDC’s price cut announcement, and continuous fall in pellet and iron ore prices lowered offers for iron ore concentrates and hence cooled off-trade activity, SteelMint notes.

“Amidst weak iron ore market and bid-offer disparities, we have suspended operations currently,” a Jabalpur-based supplier said.

Factors weighing on iron ore concentrate prices-

• Domestic pellet prices fall to nearly 2-year low: SteelMint’s bi-weekly domestic pellet (Fe 63%) index, PELLEX, stood at INR 8,200/t DAP Raipur on 7 June 2022, down by around INR 300/t compared to the last assessment on 3 June. The index fell to its lowest since August 2020. Pellet makers in Raipur cut offers sharply in the last two days by a total of around INR 1,900-2,000/t.
• Iron ore fines prices drop further by INR 400/t: SteelMint’s weekly Odisha iron ore fines index (Fe 62%) fell further by INR 400/t w-o-w to INR 3,600/t ex-mines. Post-export duty hike, many buyers are showing reluctance to buy amid the uncertain market conditions and lower plant capacity utilisation. Miners were actively offering lower grade ore Fe 57-59% to clear the existing inventories. The deals for high-grade ore continued to remain under pressure on falling pellet prices, anticipated price cuts from the miners and the awaited floor price announcement from OMC.
• NMDC cuts iron ore prices by around 20-25%: NMDC slashed prices of lump ore by up to INR 1,320/t and fines by INR 1,100/t, effective from 5 June, SteelMint learnt from credible sources. Price fell by about 20-25% from the last price announcement on 25 May 2022. This is the second price cut by the miner after the Indian government imposed an export duty of 50% on iron ore and 45% on iron pellets.

Outlook

Iron ore concentrate prices are likely to remain under pressure amid falling pellet and iron ore prices post-the export duty announcement. Also, as buyers are holding back purchases, offers may see some correction in the near term.