India: Iron ore concentrate prices range-bound, likely to fall in near term

Iron ore concentrate prices in Jabalpur, central India, remained range-bound this week in recent deal. SteelMint’s assessment for Fe 63% concentrate prices currently stands at around INR 2,900/tonne (t) exw, stable as against the last assessment on 12 November.

Meanwhile, one deal of 20,000 t was heard at around INR 2,800-2,900/t exw this week as against no trade on 12 November. This deal has been taken into consideration in the T1 trade of the index.

However, a downward correction in prices is expected amid weak iron ore sentiments and stable pellet prices.

Factors that may pull down prices-

• Falling pellets prices: SteelMint’s bi-weekly domestic pellets (Fe 63%) index, PELLEX, stood at INR 7,600/t, down by INR 200/t compared to the last assessment on 11 November. Trade continued to remain muted on the bid-offer disparities and a drop in sponge iron prices. The offer-bid gap is getting narrowed down but still market participants are away from making buying decisions for pellets as they are still searching for more clarity from the market.
• Odisha iron ore fines prices drop to a 2-month low: SteelMint’s weekly Odisha iron ore fines (Fe 62%) index inched down by INR 100/t to INR 3,400/t ex-mines (including royalty, DMF and NMET). The index has fallen to a two-month low, as per SteelMint data. The drop in pellets and sponge iron prices along with recent iron ore import bookings continued to weigh on the Odisha iron ore index.
• OMC’s iron ore auctions receive subdued response: Odisha Mining Corporation (OMC) conducted an iron ore auction (0.75 mnt of fines and 0.65 mnt of lumps) today. According to market sources, nearly 16,000 t of fines have been booked at the base price while the remaining lots were unsold. At OMC’s iron ore lumps auction today, only 194,000 t or 29.85% of the total quantity put on offer (650,000 t) received bids. Bid prices at today’s auction fell by up to INR 850/t compared to the last month’s auction.

Outlook

Iron ore concentrate prices are expected to drop in the near term. However, the deciding factor could be buyers’ expectations of a price cut and the movement in pellets and NMDC iron ore prices.