SteelMint: Odisha iron ore fines index drops further by INR 300/t, buyers await market clarity

SteelMint’s weekly Odisha iron ore fines index (Fe 62%) fell further by INR 300/t w-o-w to INR 3,300/t ex-mines. Many buyers are still reluctant to buy the material at the current uncertain market conditions amidst the expectation of a price drop in the short term, fall in pellet and sponge iron prices and lower plant capacity utilisation. Market participants are waiting for the next OMC (state PSU miner) auction scheduled on 17 June which may provide a better price clarity.

Rationale:

• T1- No confirmed deals for high grade (Fe 62%) were heard. Therefore, 0% was weightage was given in this index.
• T2- SteelMint received fifteen (15) offers and indicative prices under T2 trade deals in this publishing window out of which nine (09) were taken into consideration and given 100% weightage. To check SteelMint’s iron ore assessment, pricing methodology and specification documents Click here.

Vedanta subsidiary Electrosteel Steels Ltd (ESL) scheduled an auction for the sale of around 70,000 t of fines and lumps (both Fe 58-60%) on 10 June 2022 from its Nadidih BICO and Feegrade mines, Odisha. According to market sources, the entire quantity of 50,000 t of fines was booked at around INR 1,550-1,600/t ex-mines (including Royalty, DMF & NMET) against the base price of INR 1,550/t. Only 6,000 t of lumps was booked out of 20,000 t at the base price of INR 2,800/t. The offered quantity was lowered to 70,000 t at the time of auction as against 120,000 t announced earlier.

In another deal, steel major JSW Steel Ltd booked around 20,000 t of Fe 60% grade fines at around INR 2,200-2,500/t from Odisha (ex-mines, including royalty, DMF and NMET) this week.

Odisha iron ore prices:

Highlights from other states-

• Iron ore offers from Lloyds Metals, Maharashtra fall: The miner’s offers for lumps (5-18mm, Fe 63%) were recorded at INR 7,000/t FOR Raipur. Prices corrected by around INR 1,000/t since the beginning of the month. Lloyds Metals is operating an iron ore mine, spread over an area of 348.09 hectare in Surjagarh village in Gadchiroli district, Maharashtra. The mine has estimated reserves of 90 million tonnes (mnt).
• Vedanta’s Karnataka auction receives tepid response: Vedanta scheduled an auction for the sale of around 116,000 t of iron ore on 08 June 2022 from its A. Narrain mines in Karnataka’s Chitradurga district. According to market sources, the entire quantity of 16,000 t of lumps (6-20mm, Fe 59.5%) was booked at around INR 3,403/t (excluding royalty, including DMF and NMET) against the base price of INR 3,383/t while 100,000 t of fines failed to receive bid.
• NMDC’s Karnataka auction receives overwhelming response: NMDC conducted an iron ore e-auction on 7 June 2022 from its Donimalai mines, Karnataka at which 504,000 t was booked out of 600,000 t put on offer. JSW Steel emerged as the largest buyer at 364,000 t followed by BMM Ispat Limited at 64,000 t.