Factors to Decide Indian Iron Ore Prices for Dec’16

NMDC revised iron ore prices yesterday in which the miner increased iron ore fines prices by INR 100/MT and kept lump prices unchanged. However Odisha based merchant iron ore miners are yet to take a call on prices.

Market participants reported less iron ore trade activities post demonetization. Amid cash crunch, buyers have reduced inquiries.

Few market sources shared that not much revision in Odisha iron ore prices is expected in the first half of the coming month, however if sponge iron prices increases further, iron ore prices in Odisha may also move up.

Key highlights that will govern iron ore prices for Dec’16 –

1. C.G. based sponge plants’ iron ore sourcing stable in Nov’16 – C.G. based sponge units procured 60 rakes of iron ore from NMDC (C.G.) till 28 Nov’16. In Oct’16, they had sourced 65 rakes.

2. JSW Steel’s iron ore sourcing from NMDC (C.G.) – JSW Steel, Dolvi has procured 39 rakes in Nov’16 (till 28 Nov’16). Last month it had sourced 42 rakes.

3. Global iron ore prices retreat after hitting USD 80/MT mark – Global iron ore fines (Fe 62%) index touched USD 80.2/MT, CFR China. But yesterday prices fell amid weaker sentiments in China’s steel market. Today prices dropped to USD 72./MT, CFR China.

4. Domestic sponge iron prices gain strength in later half of Nov’16 – Sentiments have slowly started picking pace after sponge prices fell immediately in line with currency demonetization. Presently sponge iron price movements are as follows: Durgapur (78 FeM) – INR 13,800/MT del, Ex-Raipur (80 FeM) – INR 14,400/MT, Ex-Bellary (78 FeM) – INR 13,850/MT.

5. Finished steel producers hike prices significantly – Major finished flat producers have announced hike in prices by INR 1,500-2,000/MT w.e.f 01 Dec’16. High coking coal prices continues to drive up finished steel prices. HRC prices in Mumbai are assessed at INR 40,000-41,000/MT and CRC prices are seen hovering in the range of INR 43,000-44,000/MT. (Prices inclusive of excise duty @ 12.5%).

6. Prevailing dull demand in domestic pellet market – Domestic pellet prices in India remained stable across all major market except western India where they moved up in line with global iron ore prices. Pellet makers continue to see export as potential market amid better realizations and dull domestic buying interest.