- Higher coal, sponge iron prices support iron ore offers
- High-grade iron ore availability remains constrained
Karnataka’s iron ore prices rose during the week ended 30 July as higher coal prices, stronger sponge iron values, and an improvement in finished steel prices lifted sentiment across the state’s steelmaking value chain. Although mining activity and dispatches continued to be impacted by heavy monsoon rains, miners largely maintained firm offers amid tightening availability, particularly for higher-grade material.
BigMint’s Fe 57% fines index increased by INR 150/t ($1.5/t) w-o-w to INR 2,700/t ($28/t) ex-mines. While demand for low-grade fines remained largely stable, the broader improvement in steelmaking economics encouraged buyers to accept higher prices, allowing sellers to revise offers upward.
Meanwhile, BigMint’s benchmark Fe 62% fines assessment remained stable w-o-w at INR 5,000/t ($52/t) ex-mines. The assessment reflected a broadly balanced market, despite a few lower-priced deals concluded by one miner during the week. Overall, the availability of high-grade iron ore remained severely constrained, with only a handful of miners offering premium-grade material. The persistent shortage continued to underpin market sentiment, while buyers actively competed for quality ore to meet production requirements.
The shortage of premium-grade ore continued to support demand for high-grade lumps, where buyers were willing to accept elevated prices to secure limited availability. Market participants noted that depletion of quality reserves across several operating mines has made procurement increasingly competitive, particularly for material above Fe 60%.
A Bellary-based buyer told BigMint, “Large volumes from previous auctions are still awaiting evacuation, while several mine Certificates of Origin remain closed. Good-quality iron ore has become increasingly difficult to source. Wherever quality material is available, prices move higher because premium grades are depleting rapidly and more miners are selling into the 58-60% Fe category.”
Another buyer commented, “Coal prices have increased as heavy rainfall has disrupted mining and transportation. Production typically declines during the monsoon, reducing coal availability as well as iron ore supply. Rainfall intensified across the country over the past week, further tightening raw material availability.”
Persistent rainfall continued to affect mining operations and logistics across Karnataka, delaying dispatches of previously booked material and limiting fresh production. Several buyers reported that contracted cargoes were yet to be delivered due to transportation bottlenecks, while miners remained cautious in releasing fresh volumes.
Auction activity also remained subdued during the week. Only a limited number of auctions were concluded, with just one involving high-grade material, while the remaining offerings comprised lower-grade ore. Procurement remained largely requirement-based as buyers preferred to purchase material only for immediate consumption instead of building inventories during the monsoon season.
Some consumers also shifted their raw material preference towards pellets, citing the limited availability and rising cost of high-grade lump ore. Others focused on clearing existing inventories before participating aggressively in fresh auctions.
Market participants are now closely watching the upcoming NMDC Kumaraswamy auction, which is expected to provide clearer price direction and indicate the willingness of buyers to accept prevailing higher offer levels.
Rationale
- One (1) trade via e-auction was recorded for Fe 57% in this publishing window and was taken into consideration. Hence, the T1 trade category was accorded 50% weightage.
- Fourteen (14) offers and indicative prices were reported, out of which eleven (11) were considered as T2 trades. These were accorded 50% weightage.
Rising coal costs strengthen iron ore sentiment: The week’s upward movement in iron ore prices was also supported by higher domestic coal prices, which increased steelmaking costs across coal-based sponge iron units. Simultaneously, Bellary sponge iron (C-DRI) prices rose by INR 300/t ($3/t) w-o-w to INR 26,800/t ($280/t), reflecting tighter availability and strengthening demand from steelmakers.
Several producers have shifted production from coal-based DRI to pellet-based DRI due to easier pellet availability and stronger commercial viability, reducing C-DRI supply in the market. The tighter sponge iron market, coupled with higher coal costs, improved the overall pricing environment for iron ore and encouraged miners to hold firm on offers.
Karnataka iron ore sales scenario (24- 30 July 2026)
Outlook
Karnataka iron ore prices are expected to trade on a firm note next week, with higher coal costs, stronger sponge iron prices, and limited availability of premium-grade ore continuing to support market sentiment. Fresh auction results are likely to set the tone for pricing, while procurement activity from sponge iron producers will remain a key demand indicator.
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