SteelMint: Odisha iron ore fines index inches up amid higher grade scarcity

SteelMint’s weekly Odisha iron ore fines (Fe 62%) index increased by INR 100/t to INR 3,500/t ex-mines. As per sources, the shortage prevailing for high grade ore and improved participation in OMC’s auction have pushed up prices slightly.

Odisha Mining Corporation’s (OMC’s) iron ore fines auction received bids for 0.728 mnt, or 69% of the total quantity put on offer (1.049 mnt). The bid price for fines increased by up to INR 350/t against the last auction on 19 August, 2022, as per SteelMint sources. In another iron ore lump auction, bids were received for 387,000 t, or 56% of the total quantity put on offer (690,000 t). The bid prices in that auction fell by up to INR 600/t.

Rationale

• T1- Out of deals in OMC only two were considered for the index calculation. Therefore, 50% weightage was given to it.
• T2- SteelMint received eight (08) offers and indicative prices under T2 trade deals in this publishing window out of which six (06) were taken into consideration and given 50% weightage. To check SteelMint’s iron ore assessment, pricing methodology and specification documents Click here.

Reasons behind hike in prices

• India’s iron ore production dropped around 18% m-o-m to a little under 16 mnt in July 2022 from over 19 mnt in June, as per latest SteelMint data. Increased rainfalls and lower demand post-export duty resulted in a drop in iron ore production.
• SteelMint data shows that closing (pithead) stocks of iron ore in Odisha increased sharply by over 17% m-o-m in May to above 62 mnt from around 53 mnt in April. Mine head stocks rose further to 66 mnt in June before falling to roughly 64 mnt in July. The rise in closing stocks clearly reflects the slow pace of iron ore offtake by the mills on weak market sentiments.
• SAIL iron ore auctions, conducted recently, have been fetching subdued response due to the high base price. This resulted in lower supplies in the merchant market.

Odisha iron ore prices:

Highlights from other states:

• Over 550,000 t of iron ore booked at NMDC’s auction from Karnataka: National Mineral Development Corporation (NMDC) conducted an auction today for sale of 593,000 t of iron ore from its Kumaraswamy mines in Karnataka. According to sources, the entire quantity of 336,000 t of fines (Fe56.29-64.21%) and 257,000 t of lumps (Fe57.62-65.77%) were booked at around INR 1,461-2,228/t and INR 1,914-2,882/t, respectively. Prices exclude royalty, DMF and NMET.
• DR-CLO lots receive active bids in NMDC’s Chhattisgarh auction: NMDC conducted an iron ore auction from Chhattisgarh today for 184,800 t of Fe 64-67% (indicative) material from the Bacheli mines, and 92,400 t (Fe64-65.50%, indicative) ore from the Kirandul mines. The entire quantity of 16,800 t of DR-CLO was booked at a premium of INR 450/t over the set base price of INR 4,957/t (excluding royalty, DMF and NMET) at the auction. The remaining lots remained unsold.