India: Iron ore fines index rises in Odisha, but prices stable elsewhere

SteelMint’s weekly Odisha iron ore fines (Fe 62%) index inched up by INR 200/t to INR 3,700/t ex-mines in the recent deals concluded.

In line with expectations, at Odisha Mining Corporation’s (OMC’s) iron ore fines auction on 19 October 2022, 0.944 mnt, or 91% of the total quantity put on offer (1.037 mnt), received bids. The bid price for fines increased by up to INR 450/t in the majority of the lots against the last auction on 19 September, 2022. Tight availability of high-grade ore fines, lower inventories with mills and supported pellets offers in eastern India have made the auction a success.

Moreover, prices have remained range-bound in the recent auctions conducted in Karnataka. Offers from NMDC Chhattisgarh have also remained stable.

Rationale:

• T1- Three deals of OMC around 450,000 t iron ore fines from Guali, Jiling and Daitari taken into consideration for the index calculation and given 50% weightage.
• T2- SteelMint received ten (07) offers and indicative prices under T2 trade deals in this publishing window out of which six (06) were taken into consideration and given 100% weightage. To check SteelMint’s iron ore assessment, pricing methodology and specification documents Click here.

Odisha iron ore prices:

Factors behind hike in prices:

• India’s iron ore production falls in H1: India’s iron ore production fell 9% y-o-y to around 110.4 mnt in H1FY23 (April-September, 2022) compared to 120.74 mnt in the same period last year. Monsoons have resulted in a sharp decline in output in Odisha, India’s largest iron ore-producing state.
• Price support from pellets: Pellet prices in eastern India markets like Barbil and Durgapur have risen by INR 200-250/t w-o-w.
• Hike in offers by few miners: A few Odisha-based miners like SN Mohanty and others are heard to have raised iron ore offers by INR 200/t to INR 3,900-4,000/t ex-mines for Fe 62% fines.

Iron ore prices in Karnataka remained stable in Vedanta’s auction: Vedanta scheduled an auction on 21 October for sale of 116,000 t of iron ore from its A. Narrain mines in Karnataka’s Chitradurga district. According to market sources, the entire quantity of 100,000 t of fines (Fe57.5%) and 16,000 t of lumps (Fe58-60%) were booked at the base price of INR 1,325/t and INR 3,899/t (excluding royalty, DMF and NMET charges). Prices have remained largely stable against the company’s last auction.

Outlook

The other miners in Odisha are likely to raise fines offers next week. However, lump offers are likely to remain range-bound in the near term.