- Bids rise by INR 50-150/t m-o-m in OMC auction
- Private miners to revise offers next week
Iron ore prices in Odisha increased by INR 100-200/t w-o-w, supported by higher bids observed in the latest OMC auction and a firm response from buyers. The auction saw active participation from steelmakers, indicating improved sentiment and a willingness to secure raw material amid tightening supply conditions.
Price update
BigMint’s Odisha iron ore fines (Fe 62%) index increased by INR 100/t ($1/t) w-o-w to INR 5,850/t ($63/t) ex-mines on Friday (20 March). It recorded deals for around 405,000 t this week, concluded directly by steelmakers with private miners and traders.
In OMC’s iron ore fines auction for 2.04 mnt (Fe 51-65%) on 19 March, around 1.677 mnt (82%) was booked at INR 2,800-6,150/t ex-mines. The majority of the lots received premiums of INR 400-1,000/t. Meanwhile, weighted average bids rose by INR 150/t m-o-m. The lack of offers and limited availability of ore in the merchant market, along with miners’ EC expiration and the hike in steel prices, led to bids rising in the auction.
In OMC’s auction for 1.57 mnt of iron ore lumps (Fe 60-65%), 100% material was booked at INR 5,750-7,350/t, with premiums up to 32% over base prices. Weighted average bids rose by INR 50/t m-o-m. Earlier, OMC had lowered the base prices of lumps by INR 50-600/t. The auction witnessed strong demand due to the nearing expiry of some private miners’ ECs, which could tighten supply in March.
Market highlights
Market activity remained steady during the week, with limited offerings from private miners contributing to the firm price trend. A few transactions were concluded in the merchant market, although overall availability continued to remain constrained. According to market participants, supply tightness is largely due to the ongoing transition period before the renewal of Environmental Clearance (EC) limits for the new financial year.
A miner informed, “Offer availability has been restricted over the past few weeks due to EC expiry, but we expect fresh supply to enter the market from next week as miners begin booking orders under renewed EC limits.” This anticipated influx of material could bring more clarity to pricing trends in the near term.
On the cost front, miners highlighted a sharp increase in operational expenses, primarily driven by a recent 25% hike in industrial diesel prices. The surge in fuel costs, influenced by rising global crude oil prices and ongoing geopolitical tensions in the Middle East, has significantly increased mining and transportation expenses. “The increase in diesel prices has directly impacted extraction costs, and this will be reflected in upcoming offers,” a miner stated.
From the demand side, steelmakers remained active in securing bulk volumes through the OMC auction, with bids rising compared to the previous month. A steelmaker said, “We have booked sufficient volumes via the auction route and will now rely on need-based procurement from private miners.” This indicates a balanced procurement strategy amid price uncertainty.
A trader commented. “Buyers are cautious and waiting for fresh offers from private miners before committing to large-scale purchases.”
Looking ahead, iron ore prices in Odisha are expected to remain on an upward trajectory, supported by higher OMC auction benchmarks, rising input costs, and the anticipated release of fresh material in the market.
Factors affecting iron ore prices
Pellet prices show mixed trend: Pellet (6-20 mm, Fe 62.5%) prices in Odisha’s Barbil inched up by INR 150/t w-o-w to INR 9,250/t ($99/t) loaded to wagon on 20 March. Pellet (Fe 62.5%, 6-20 mm) prices in Durgapur fell by INR 200/t to INR 10,400/t ($111/t) exw.
Sponge iron prices drop w-o-w: According to BigMint’s assessment, sponge iron C-DRI (FeM 80%) prices in Rourkela decreased by INR 500/t ($5/t) w-o-w to INR 27,600/t ($295/t) on 20 March.
Billet prices down w-o-w: Meanwhile, steel billet (100*100 mm) prices in Rourkela also dropped by INR 650/t ($6-7/t) w-o-w to INR 40,350/t ($430/t) on 20 March.
Rationale
- T1- Six (6) deals for Fe 62% fines were recorded in the publishing window, and two (2) were considered for price computation. These were given 50% weightage for index calculation.
- T2 – BigMint received thirteen (13) offers and indicative prices under the T2 category (offers, indicative, and bids) in this publishing window. Thirteen (13) were taken into consideration and given 50% weightage. To check BigMint’s iron ore assessment, pricing methodology, and specification document, click here.
Outlook
BigMint expects iron ore prices in the Odisha region to increase amid the recent hike in industrial fuel prices, along with expectation of hike in fresh offers by miners next week.
Leave a Reply