- Higher-grade ore continues to see stronger buyer preference
- Higher coal costs strengthen overall raw material cost sentiment
Iron ore prices in Karnataka increased during the week ended 27 August, with prices hitting an over eight-month high supported by improving sentiments across the sponge iron and downstream steel segments. Firmness in coal prices has further strengthened the overall raw material cost structure, keeping sellers relatively firm on iron ore offers despite subdued demand for lower-grade material.
According to BigMint’s latest assessment, Fe 57% iron ore fines prices increased by INR 50/t ($0.5/t) w-o-w to INR 2,800/t ($29/t) ex-mines. While demand for lower-grade material remained weak as buyers remain cautious on cost economics, prices edged up in line with the broader firmness in raw material markets.
Benchmark Fe 62% iron ore fines prices also increased by INR 100/t w-o-w to INR 5,150/t ($54/t) ex-mines. The higher-grade segment continued to outperform lower grades as availability remained tight. Market participants reported that only a limited number of miners are currently offering higher-grade material, while buyers continue to actively seek consistent-quality cargoes. This supply-demand imbalance has enabled sellers to maintain a stronger price stance.
Market sentiment was further supported by firmness in the coal market. Higher coal costs are keeping sponge iron production economics under pressure, while expectations of sustained downstream steel demand are providing some support to mill buying interest. With raw material costs remaining elevated, buyers are increasingly prioritising higher-grade iron ore to improve yield and reduce overall consumption per tonne of sponge iron, further widening the preference gap between high- and low-grade material.
Auction activity remained subdued during the week, particularly for lower-grade material, as buyers remained reluctant to participate at current cost levels. Market participants indicated that weak buying interest in low-grade ore is partly linked to its relatively poor cost efficiency compared with higher-grade alternatives.
A Karnataka-based seller noted that “pellet demand remains present, but buyers are increasingly focused on material quality, consistency and competitive pricing. The seller added that limited availability from some miners is supporting prices, while dispatch constraints are also restricting spot-market supply.”
Buyers, however, expect the market to turn quieter in the near term after several bulk requirements were already covered. One buyer indicated that “purchasing activity could moderate as buyers have completed significant bookings and are likely to remain on the sidelines until clearer price signals emerge.”
Another buyer reported good participation in some NMDC auction lots but noted that low-grade demand remains weak as its higher consumption requirement makes it less economical. The buyer expects merchant-miner prices of higher-grade material to increase in the coming week as buyers continue to prioritise quality and better yield.
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 nine (9) were considered as T2 trades. These were accorded 100% weightage.
C-DRI prices rise sharply by INR 1,200/t ($13/t) w-o-w in Bellary: Meanwhile, Bellary’s coal-based sponge iron (C-DRI) prices increased by INR 1,200/t ($13/t) w-o-w to INR 28,800/t ($302/t), primarily driven by firm coal prices, which have pushed up sponge iron production costs. With adequate bookings at prevailing levels and continued firmness in coal prices, C-DRI prices may witness further upward movement as producers seek to protect margins.
South African coal prices rise w-o-w: South African thermal coal prices at Indian ports rose sharply as of 27 August 2026, supported by tighter cargo availability, higher freight costs, monsoon-related domestic coal supply disruptions and stronger sponge iron prices. BigMint assessed RB2 (5,500 NAR) ex-Paradip at INR 12,500/t, up INR 700/t w-o-w, while ex-Vizag rose INR 800/t to INR 12,500/t. RB3 (4,800 NAR) ex-Paradip increased INR 750/t to INR 11,550/t, while ex-Vizag rose INR 800/t to INR 11,500/t.
Karnataka iron ore sales scenario (21- 27 August 2026)
Outlook
Iron ore prices in Karnataka are expected to remain range-bound with a firm undertone. Tight availability of higher-grade material and elevated C-DRI prices may support prices, while weak low-grade demand and cautious buying after recent bulk bookings could cap further gains.
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