India: Odisha iron ore fines index falls to two-month low amid decreasing pellet prices

SteelMint’s weekly Odisha iron ore fines (Fe 62%) index decreased by INR 100/t to INR 3,400/t ex-mines (including royalty, DMF and NMET). The index has fallen to nearly a two-month low, as per SteelMint data. The drop in pellets and sponge iron prices and recent iron ore import bookings have continued to weigh on the Odisha iron ore index.

Rationale:

• T1- One deal was reported for this week and therefore taken into consideration for the index calculation and given 50% weightage. About 110,600 t of Fe 62% fines was booked at JSW Steel’s auction at INR 3,210/t ex-mines on 11 November.
• 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 the drop in index-

• Drop in pellet offers: SteelMint’s bi-weekly domestic pellet (Fe 63%) assessment stood at INR 7,100/t loaded to wagons in Barbil, down by INR 150/t compared to last week due to declining demand from sponge iron players.
• Recent imported iron ore bookings: Imported iron ore bookings to India had gained momentum when global iron ore prices plunged towards end-October. According to sources, nearly 1 mnt of high grade iron ore fines from Brazil and Canada are slated for January arrivals.
• Sponge iron prices drop further: SteelMint’s daily sponge iron, CDRI index, was assessed at INR 32,000/tonne (t) exw-Rourkela on 12 November. On a weekly basis, prices have come down by INR 500/t.

Bids fall marginally in recent Karnataka iron ore auctions – Vedanta conducted 120,000 t of iron ore fines (Fe57%) auction on 11 November and the entire material was sold at the base price of INR 1,277/t (excluding royalty, DMF and NMET). Vedanta had offered 24,000 t of iron ore lumps (6-20mm, Fe55-58%) for auction in Karnataka on 9 November. The entire material was booked at the base price of INR 3,979/t, down by INR 581/t as against the last lumps auction on 28 October.

About 12,000 t of lumps (10-40mm, Fe62.5-64%) were booked at SKEMPL’s auction on 9 November at around INR 4,880-5,780/t. Prices are inclusive of royalty, DMF and NMET charges.

Chandrapur-based miner cuts lump offers – A Chandrapur, Maharashtra-based iron ore miner has offered iron ore lumps (5-18mm, Fe 63%) at INR 7,000/t FOR Raipur and fines (Fe 63%) at around INR 3,700-3,800/t FOR Ballarshah. Lump ore offers have come down by INR 200-300/t.Deals of around 70,000t lumps were concluded at around INR 6,800-7,000/t FOR Raipur.

Outlook: Market uncertainty and weak buying interest are likely to keep Odisha iron ore prices under pressure. Market sources are awaiting OMC’s iron ore auction, which is expected to take place next week.