Odisha based merchant miners maintained same iron ore offers for 2nd half of Dec’16.
Market participants reported decent iron ore demand from sponge manufacturers and optimism in sponge market amid hike in billet offers in later half of Dec’16. Trade sources also shared that iron ore prices in Odisha may move up provided the price surge in semi-finished steel market sustains.
Key highlights that will govern iron ore prices for Jan’17 –
1. C.G. based sponge plants’ iron ore sourcing down in Dec’16 – C.G. based sponge units procured 46 rakes of iron ore from NMDC (C.G.) in Dec’16*. In Nov’16, they had sourced 65 rakes. It appears that its an outcome of currency demonetization following which few sponge manufacturers curtailed production.
2. JSW Steel’s iron ore sourcing from NMDC (C.G.) up in Dec’16- JSW Steel has procured 48 rakes in Dec’16*. Last month it had sourced 42 rakes from NMDC (C.G.). However, steel maker’s iron ore sourcing from Odisha has come down to 0.32 MnT in Dec’16* compared to 0.39 MnT in Nov’16.
3. RINL’s iron ore procurement from NMDC (C.G.) down in Dec’16 – RINL (Vizag Steel) has procured 156 iron ore rakes in Dec’16* against 181 rakes in Nov’16.
4. KIOCL’s iron ore sourcing from NMDC (C.G.) moves up further in Dec’16 – Mangalore based pellet maker – KIOCL procured 62 rakes from NMDC in Dec’16* against 49 rakes in Nov’16.
5. Domestic pellet prices likely to increase further – Strengthening P-DRI prices has led to increase in domestic pellet offers as well. Pellet prices in Raipur have gone up by INR 400/MT in last two weeks and are presently heard to be in the range of INR 4,700-4,800/MT (basic).
Barbil based pellet maker – JSPL which was not seen giving offers in domestic market since last 2-3 months, has recently supplied 7-8 pellet rakes in domestic market, as per trade sources. According to trade sources report, the pellets rakes booked were at INR 4,000/MT (loaded to wagons). Market participants expect Barbil pellet prices to rise further by INR 100-200/MT in upcoming month.
6. Global iron ore prices remained range-bound in Dec’16 – Iron ore fines (Fe 62%) index this month remained range-bound at USD 78-83/MT, CFR China. Sentiments prevailing in China’s domestic market primarily governed iron ore prices. However iron ore trading activities in China remained thin owing to Christmas and New year holidays.
7. Domestic sponge iron prices gained strength in later half of Dec’16 – Sponge iron prices in India remained under pressure in 1st half of Dec’16 with limited trade activities and curtailed production. However, prices started gaining strength later half of this month with increase in billet prices. Presently sponge iron price movements are as follows: Durgapur (78 FeM) – INR 15,100/MT del, Ex-Raipur (80 FeM) – INR 15,500/MT, Ex-Bellary (78 FeM) – INR 15,050/MT.
8. Finished steel producers to hike prices significantly in Jan’17 – Major finished flat producers are likely to raise flat steel product prices by INR 5,000-6,000/MT in tranches next month. As per reports, this would be the largest single price hike in last 5 years. To offset hike in production cost amid coking coal price surge, Indian steel makers are planning to go for price hike.
However, it is doubtful whether this price surge will sustain and support the present market scenario as demand in domestic market continues to remain weak with thin trading.
Note: * indicates data updated till 26 Dec’16
Leave a Reply