- Over 3 mnt iron ore booked in OMC auction
- Fines bids stable m-o-m, lumps drop INR 250/t m-o-m
Iron ore prices in Odisha remained unchanged in the week ended 20 December, largely supported by the robust response to Odisha Mining Corporation (OMC) auction on Friday, according to market participants. Buyers actively participated in the auction, reflecting sustained demand despite recent market fluctuations.
Price update
BigMint’s Odisha iron ore fines (Fe 62%) index remained unchanged w-o-w at INR 5,700/t ($63/t) ex-mines on Saturday. BigMint recorded deals for around 280,000 t of iron ore this week, concluded directly by steelmakers.
In OMC’s iron ore fines auction for 2.22 mnt (Fe 51-62%) on 19 December, around 2.14 mnt (97%) was booked at INR 2,500-6,000/t. The lots received premiums ranging from INR 50 to 1,100/t, with INR 750/t being the average premium over base prices. Bids (weighted average) remained stable m-o-m.
In OMC’s auction for 1.193 mnt of iron ore lumps (Fe 60-65%), the entire material was booked at INR 5,700-8,600/t, with premiums of INR 1,050-3,300/t. Weighted average bids dropped by around INR 250/t m-o-m, driven by a sharp decline in sponge iron prices in December first half. Earlier, OMC had also decreased the base prices of lumps by INR 400-750/t.
Market highlights
Sources noted that even after a reduction in base prices and an increase of around 0.5 million tonnes in the auction quantity, bid levels recovered well, particularly in the fines segment. A steelmaker said, “The recovery in bids despite higher volumes clearly indicates that buyers are still comfortable at current price levels.”
Market participants mentioned that private miners have largely stayed away from the spot market this week. Miners are expected to revise their offers in the coming week, following which trading activity is likely to resume at new price levels. ‘Most miners are holding back material and waiting to assess the post-auction sentiment before quoting fresh offers,” a market source added.
On the demand side, steel producers said that the recent hike in downstream steel prices has improved overall market confidence. The firm trend in sponge iron, billet, and finished steel prices has encouraged buyers to remain active in raw material procurement. A market participant informed, “Improvement in steel prices in the last couple of days has given mills the confidence to bid aggressively in the auction.”
Limited availability of material in the open market, coupled with the absence of offers from several miners, also supported higher bids in the OMC auction. Sponge iron producers mentioned that many had not booked material after the previous OMC auction, which led them to participate actively in yesterday’s sale to secure supplies.
A sponge iron producer commented, “Raw material inventory levels were running low, so participation was necessary.”
Looking ahead, market participants expect more clarity on price direction next week once revised offers from private miners emerge. While iron ore fines prices are expected to remain firm in the near term, lumps may witness a marginal downward correction of around INR 200–300/tonne, supported by relatively balanced supply-demand dynamics.
Factors affecting iron ore prices
Pellet prices fall w-o-w: Pellet (6-20 mm, Fe 62.5%) prices in Odisha’s Barbil fell by INR 100/t ($1/t) w-o-w at INR 8,500/t ($95/t) loaded to wagon on 5 December. Pellet (Fe 62.5%, 6-20 mm) prices in Durgapur fell by INR 100/t ($1/t) to INR 9,550/t ($107/t) exw.
Sponge iron prices rise w-o-w: According to BigMint’s assessment, sponge iron C-DRI (FeM 80%) prices in Rourkela increased by INR 450/t ($5/t) w-o-w to INR 23,950/t ($267/t) on 12 December.
Billet prices up w-o-w: Meanwhile, steel billet (100*100 mm) prices in Rourkela increased by INR 1,300/t ($14/t) w-o-w to INR 36,500/t ($407/t) on 12 December.
Rationale
- T1- Six (6) deals for Fe 62% fines were recorded in the publishing window, and three (3) were considered for price computation. These were given 50% weightage for index calculation.
- T2 – BigMint received eighteen (18) offers and indicative prices under the T2 category (offers, indicative, and bids) in this publishing window. Eighteen (18) were taken into consideration and given 50% weightage. To check BigMint’s iron ore assessment, pricing methodology, and specification document, click here.
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