- Auction volumes remain low amid uncertain demand
- Steel sector slowdown restrains raw material uptake
Karnataka’s iron ore market remained under pressure during the assessment period, as weak steel sector fundamentals and subdued buying sentiment weighed on both lower and higher-grade ore prices. Fe 57% fines were assessed at INR 2,600/t ($27/t) ex-mines, down INR 100/t ($1/t) w-o-w, as buyers largely refrained from procurement amid sluggish downstream consumption, falling finished steel prices, and persistent pressure on sponge iron margins. Market participants reported limited interest in lower-grade material, prompting sellers to remain cautious and avoid aggressive offerings.
Meanwhile, benchmark Fe 62% fines prices edged down by INR 50/t ($0.5/t) w-o-w to INR 4,900/t ($52/t) ex-mines. Despite the marginal correction, demand for high-grade ore remained relatively resilient compared to lower grades, supported by better productivity, improved recovery rates, and operational efficiencies. Market sources indicated that supply of premium-grade ore continued to be constrained, with only a limited number of miners actively offering material while several others remained absent from the market. The restricted availability helped prevent a sharper decline in prices despite the broader weakness in the steel value chain.
Auction activity across Karnataka also remained subdued, reflecting both supply-side constraints and cautious buying sentiment. During the week, Karnataka-based miners auctioned only 291,000 t of iron ore, of which approximately 264,000 t was successfully booked. The relatively low auction volumes suggest limited material availability with miners, while muted participation from buyers further discouraged frequent auction activity. Market participants noted that uncertain demand conditions and declining steel prices have made buyers increasingly selective in their procurement decisions.
Weakness was particularly evident in the Bellary cluster, where several sponge iron producers either curtailed production or temporarily shut down kilns as profitability continued to deteriorate. According to a Bellary-based miner, demand has weakened considerably, with many buyers increasingly preferring pellets over calibrated direct-reduced iron (C-DRI) feed due to better economics and operational advantages.
Pressure on the downstream segment was further reflected in the sponge iron market. Bellary C-DRI prices declined by INR 100/t ($1/t) w-o-w to INR 26,500/t ($276/t), amid extremely weak buying interest and elevated finished steel inventories. Steelmakers remained reluctant to build inventories as poor margins and sluggish steel sales continued to weigh on production activity. Several mills in the region have either reduced operating rates or temporarily suspended operations, underscoring the challenging conditions prevailing across the domestic steel sector.
A major buyer echoed these concerns, stating that “finished steel prices continue to decline while key raw material costs, particularly coal and iron ore, remain elevated, severely compressing margins. According to the buyer, restocking appetite remains limited as current market conditions do not justify inventory accumulation. While iron ore availability remains relatively tight, buyers believe further corrections in raw material prices are necessary to restore viability across the sponge iron and steelmaking value chain.”
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.
- Fifteen (15) offers and indicative prices were reported, out of which fourteen (14) were considered as T2 trades. These were accorded 100% weightage.
C-DRI prices fall by INR 100/t ($1/t) w-o-w in Bellary: Sponge iron (C-DRI) prices in Bellary fell by INR 100/t ($1/t) w-o-w to INR 26,200/t ($278/t). The price correction was driven by subdued demand from the finished steel segment and limited buying activity in the market. Market participants reported only average booking volumes, while sentiment remained cautious. Most traders and producers do not anticipate any significant price increase in the coming weeks due to the prevailing weak demand conditions.
Karnataka iron ore sales scenario (19- 25 June 2026) 
Outlook
Iron ore prices in Karnataka are expected to remain range-bound with a slight downward bias in the coming week, as demand from the finished steel and sponge iron sectors continues to be subdued. Market participants believe that any meaningful recovery in raw material prices will depend on an improvement in downstream demand. In the absence of stronger buying activity, prices are likely to stay under pressure, while upcoming miner auctions may provide greater clarity on market direction and supply-side dynamics.
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