- Miners optimistic as high-grade ore premiums strengthen
- Auction slowdown tightens supply of quality iron ore
Low-grade iron ore prices in Karnataka remained largely stable in the week ended 4 June, reflecting subdued demand fundamentals across the downstream steel value chain. While Fe 57% fines continued to hover around INR 2,750/t ex-mines, benchmark Fe 62% fines gained INR 100/t w-o-w to INR 5,000/t, primarily driven by acute scarcity of high-grade ore rather than any meaningful improvement in underlying steel demand.
According to sources, NMDC has increased its prices by INR 200/t ($2/t) for LTA, further supporting higher prices.
As per the sources mentioned that iron ore dispatches from NMDC’s Kumarswamy mines have slowed down in the past couple of months. Consequently, auction volumes have reduced, following which production too has been reduced. Dispatch volumes have fallen nearly to halve from usual numbers.”
The market continues to exhibit a widening divergence between high-grade and low-grade material. Limited availability of quality ore and a lack of consistent auction activity from major miners have strengthened the premium commanded by high-grade fines. Consumers dependent on superior-grade feedstock have been left with limited procurement options, forcing them to accept elevated price levels despite weak finished steel market conditions.
Several sponge iron manufacturers are reported to have either curtailed production or temporarily suspended operations, citing unsustainable production economics. Market participants indicate that operating plants at current raw material costs and finished product prices offers little commercial viability, prompting producers to prioritize cost control over output maximization.
Auction activity remained largely muted during the week, restricting market liquidity. The limited availability of auctioned material has further tightened the supply of quality ore in the spot market. Industry participants expect auction volumes to improve in the coming weeks as miners prepare inventories for sale, which could provide clearer indications of buyer acceptance levels and prevailing market sentiment.
Meanwhile, lower-grade ore continues to face demand challenges, resulting in weaker auction participation.
Rationale
- Zero (0) 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 eight (8) were considered as T2 trades. These were accorded 100% weightage.
C-DRI prices fall by INR 550/t ($6/t) w-o-w in Bellary: Prices of sponge iron (CDRI) in Bellary fell by INR 550/t ($6/t) w-o-w to INR 26,600/t ($278/t) pressured by weak buying interest amid subdued demand from the finished steel sector. Market sentiment remained bearish as sluggish downstream consumption continued to weigh on sponge iron procurement activity.
Karnataka iron ore sales scenario (29 May- 4 June 2026)
Outlook
Karnataka iron ore prices are expected to remain firm in the near term, supported by the continued scarcity of high-grade material and recent upward revisions in miners’ offer prices. However, weak demand from the steel and sponge iron sectors may limit any significant upside. The outcome of these auctions will be crucial in determining whether current price strength can be sustained amid the prevailing demand-side challenges.
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