Karnataka iron ore e-auctions received overwhelmed response in Feb’16. Iron ore sales surged sharply by 73% against Jan’16.
As per SteelMint analysis, Karnataka e-auction received overwhelming response and recorded highest monthly sales in the month of Feb. in FY16. Total, 3.12 MnT iron ore was allotted from Karnataka e-auctions in Feb’16. Iron ore sales surged drastically by 73% M-o-M against Jan’16.
NMDC and private miners have aggressively offered their material in Karnataka e-auction. NMDC sold 1.32 MnT iron ore (NMDC Donimalai mines sold 0.45 MnT and NMDC Kumarswamy mines sold 0.87 MnT) in Feb’16 which was 0.77 MnT iron ore in Jan’16. Iron ore sales from NMDC surged sharply by 71.4% M-o-M. On the similar lines, private miners sold 1.78 MnT iron ore in Feb’16.
Karnataka iron ore price scenario in FY16
Overall prices from Karnataka iron ore e-auction, bid prices for iron ore fines (Fe 60% weighted average) offered in Karnataka e-auctions had been consistenly fallen upto 37.4% starting FY16. In similar lines, bid prices for lump (Fe 63%) fallen by 48% starting FY16.
Although, overall prices have fallen, but, starting Jan’16, NMDC prices have increased. In Feb’16, prices for NMDC fines (Fe 60%) increased by 5% M-o-M and for NMDC lump (Fe 62%) prices have increased by 7.1% M-o-M as compared to Jan’16.
In recent updates, NMDC planning to adopt differential pricing policy for Chhattisgarh & Karnataka states to boost sales. Since its existence, NMDC has adopted a uniform pricing policy across the country, however it is now learned that the miner wants to adopt a differential pricing policy in Karnataka. In addition, Karnataka iron & steel Manufacturer’s Association (KISMA) already opposed the move, but the final decision is yet to come.
Prices in Feb’16
- NMDC’s average bid prices – lump (Fe 62.8%) at INR 1,435/MT and fines (Fe 60.5%) at INR 1,230/MT.
- Private mines’ bid prices – fines (Fe 59%) at INR 810/MT and lump (Fe 60.7%) at INR 1,270/MT (all are weighted average).
Note: Prices mentioned above are basic excluding 15% royalty & 5% VAT. In addition, levy of FDT (Forest Development Tax) on mineral purchases in Karnataka e-auctions, would be levied at the extent of 8% and not 12% only by those who purchase minerals from state controlled entities like Mysore Minerals.
Supplier-wise Allotted Quantity in Feb’16
| Supplier | Fines | Lumps | Grand Total |
| NMDC | 760,000 | 569,000 | 1,329,000 |
| Sesa Sterlite | 500,000 | 61,000 | 561,000 |
| Mysore Minerals | 100,000 | 244,000 | 344,000 |
| SMIORE | 148,000 | 41,000 | 189,000 |
| B Rudra Gouda | 68,000 | 96,000 | 164,000 |
| Others | 280,000 | 248,000 | 528,000 |
| Grand Total | 1,856,000 | 1,259,000 | 3,115,000 |
Qty in MT
Source: Karnataka DMG
JSW Steel- Procured highest quantity of iron ore in Feb’16
JSW Steel, procured 2.33 MnT iron ore (1.50 MnT fines & 0.82 MnT lumps) in Feb’16. Iron ore procurement in Feb’16, turned out to be highest monthly purchases since 2 years. This in regards to the capacity expansion plan of its Vijayanagar & Salem steel plants.
Currently, the Vijayanagar steel plant had undergone capacity expansion by additional 2 MnT making it total 12 MnT pa. In addition, the company has also added 0.1 MnT to its existing capacity of 0.9 MnT in Salem plant.
Bidder-wise Allotted Quantity in Feb’16
| Bidder | Fines | Lumps | Grand Total |
| JSW Steel | 1,508,000 | 824,000 | 2,332,000 |
| BMM Ispat | 116,000 | 4,000 | 120,000 |
| Janki Corp | 32,000 | 40,000 | 72,000 |
| Minera Steel And Power | 64,000 | – | 64,000 |
| Kirloskar Ferrous Industries | 16,000 | 24,000 | 40,000 |
| Others | 120,000 | 367,000 | 487,000 |
| Grand Total | 1,856,000 | 1,259,000 | 3,115,000 |
Qty in MT
Source: Karnataka DMG
Note: Grade & prices mentioned above are weighted average
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