- Buyers prefer premium-grade ore despite high prices
- Sponge iron prices improve around by INR 550/t ($6/t)
According to BigMint’s latest weekly assessment, the Karnataka iron ore market witnessed a firm upward trend during the week, supported by improving sentiment in the finished steel and sponge iron sectors along with strong bidding activity in NMDC’s recent Kumaraswamy auction.
Low-grade iron ore fines (Fe 57%) witnessed a rise of INR 300/t ($3/t), settling at INR 2,750/t ($29/t) ex-mines. Meanwhile, Fe 62% grade fines increased by INR 150/t ($1.5/t) to INR 4,900/t ($51/t). Demand for higher-grade ore remained comparatively stronger amid tight availability and active procurement by sponge iron manufacturers and traders.
The market drew significant confidence from NMDC’s auction conducted on 26 May’26, where the miner successfully sold the entire 301,000 t iron ore quantity offered from Kumaraswamy mines amid aggressive buyer participation. Premiums touched as high as INR 960/t for lumps and INR 490/t for fines, indicating healthy appetite for higher-grade material despite elevated price levels. The successful auction outcome provided much-needed clarity to market participants, many of whom were awaiting NMDC’s pricing direction before taking fresh positions in the spot market.
Market participants indicated that the ongoing scarcity of quality material in the region continued to support premiums for better-grade ore. Buyers were seen actively securing cargoes ahead of the monsoon season, while restocking activity from sponge iron producers further strengthened overall demand sentiment.
In contrast, lower-grade iron ore below Fe 56% continued to face weak buying interest during the week. Market sources highlighted that several auctions by other miners either witnessed poor participation, material sold only at base prices, or remaining entirely unsold. Buyers largely preferred superior-grade material even at elevated premiums, reflecting a shift towards quality-focused procurement amid uncertain market conditions.
Commenting on the market situation, a Bellary-based buyer informed BigMint that “prices had strengthened since the beginning of the week; however, the current uptrend may not sustain for long and the market could witness some correction ahead.”
Rationale
- One (1) trade via e-auction was recorded for Fe 57% in this publishing window and was not taken into consideration. Hence, the T1 trade category was accorded 0% weightage.
- Fourteen (14) offers and indicative prices were reported, out of which ten (10) were considered as T2 trades. These were accorded 100% weightage.
C-DRI prices climb by INR 550/t ($6/t) w-o-w in Bellary: The sharp increase in CDRI lumps sponge iron prices in Bellary, which rose by around INR 550/t ($6/t) to INR 27,150/t ($283/t) exw, was due to a combination of tight raw material availability, higher coal costs, limited supply and slight improvement in regional procurement activity.
A major factor supporting the uptrend was the rise in non-coking coal prices, particularly imported coal, which significantly increased sponge iron production costs for southern manufacturers. Bellary based producers, who are comparatively more exposed to imported fuel costs compared to eastern India, revised offers upward to protect margins. Market participants also indicated that controlled supply from manufacturers and balanced inventories prevented aggressive selling in the spot market.
Another important factor was the logistical and freight-related pressure arising from geopolitical tensions and elevated transportation costs, which indirectly impacted landed raw material costs and overall market sentiment.
Karnataka iron ore sales scenario (22-28 May 2026)
Outlook
Iron ore prices in Karnataka are expected to remain firm in the near term, supported by NMDC’s strong auction outcome, improving sponge iron prices, and steady demand for higher-grade material amid tight availability. Pre-monsoon restocking activity and elevated production costs are likely to keep market sentiment positive, although lower-grade material may continue to witness subdued demand and occasional price corrections due to selective buying interest.
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