Indian iron ore lumps prices hit a record high with the Odisha Mining Corporation (OMC) auction fetching active participation. OMC concluded an auction of 619,000 t from its different mines in Odisha yesterday, which fetched an average premium of about 42.8% over the set base price. OMC conducts lumps auction once in two months. This means this price will be applicable for its long term customers for next two months.
OMC auction summary
OMC is a key supplier of iron ore having around 20% of share in the merchant market, the largest being NMDC with around 30 to 35%. A large number of sponge iron plants are dependent on OMC for their raw material supplies. With lumps prices hitting record high in this auction, sponge makers have to either increase their offers to absorb the cost or they would have to curtail production. In both scenarios prices are likely to remain buoyant in short to medium term.
This is a matter of concern for Induction Furnaces (IF), which make their steel using sponge iron and scrap. With rising iron ore prices, sponge iron prices are also bound to increase. We can expect mills to increase scrap consumption to offset these higher sponge iron prices.
Indian spot steel prices increased sharply, looking at aggressive bids placed in the auction. SteelMint’s daily billet index moved up by INR 800/t to INR 42,850/t exw Raipur.
Prices as on 8:35 IST, 3rd June. d-o-d changes indicated against closing price of 02nd June
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