India: Essel Mining lifts iron ore prices on tight supply

Essel Mining – a major Odisha-based merchant miner – has increased its iron ore fines and lump offer by INR 300-350/t w.e.f today ( 23rd Jul’20).

Current offers from Koira mines were at INR 2,225/t for Fe 63% fines and INR 2,025/t for Fe 62% fines. Iron ore lump (5-18 mm, Fe 62%) offers were at around INR 3,700/t.

Offers for Kasia mine’s Fe 62% fines was at INR 2,100/t while Fe 63% fines was offered at INR 2,300/t. Iron ore lump (5-18 mm, Fe 62%) offer was at around INR 3,650/t. All offers are on an ex-mines basis and include statutory payments for royalty, DMF & NMET.

Essel’s third mine in Odisha, Jiling, was sold off in an auction to Shyam Steel though grant of mining lease to Shyam is stuck due to pending litigation.

Supply tightness in Odisha has lifted domestic iron ore prices. Limited quantity of high-grade iron ore fines are available with previous leaseholders of auctioned mines, while production has yet to start in 16 of the 19 mines auctioned. Monsoon rains have also disrupted mining and evacuation of ores in the state.

Iron ore dispatches from Essel’s Koira mine was hampered from around the last week of Jun’20 till mid-Jul’20 due to monsoon rains.

Major Odisha-based miners had 43 mn t stocks before the lockdown in March, out of which 13 mn t was high grade (Fe 62-65%). At present, mines have 8.5-9 mn t high-grade ore inventories.

Rungta Mines has also raised offers for 63% fines by INR 300-350/t to INR 2,350/t, said market participants. Rungta Mines has not yet confirmed the price hike.

Odisha posted a 5% m-o-m gain in iron ore output to 6.5 mn t in June on easing of coronavirus-related mining and logistical restrictions.

However, output continued its sharp y-o-y decline, falling by 45% from 11.73 mn t in Jun’19.

The state recorded total merchant iron ore dispatches at 7.96 mn t in Q1 FY’21, down by 64% from 22.16 mn t in Q4 FY’20. The figures exclude movement for export and dispatches of SAIL & Tata Steel. The dispatches fell due to fall in output, lower demand from steel mills, and logistical hurdles caused by lockdown to control coronavirus spread.