India: Iron ore fines prices in Karnataka inch down w-o-w amid sluggish market sentiments

• Buyers delay purchases on expectation of price drop
• NMDC cuts base price of fines for Donimalai auction

Domestic low-grade iron ore fines (Fe 57%) prices in Karnataka’s Bellary region witnessed a marginal decline this week amid subdued market activity. BigMint’s weekly index was assessed at INR 3,100/tonne ($35/t) ex-mines, excluding taxes, down by INR 50/t w-o-w. In contrast, Fe 62% fines prices remained unchanged at INR 5,250/t ($59/t) ex-mines Bellary, inclusive of taxes. Trading activity remained sluggish, with no direct deals reported, as weak demand and cautious buying sentiment continued to weigh on the market.

High-grade iron ore continues to be in short supply, with only a few miners offering such grades. Although demand for raw materials persists from sponge iron and steel producers, overall procurement remains subdued due to the muted performance of the finished steel and sponge iron sectors.

As a result, despite supply-side tightness, the weak downstream demand is exerting downward pressure on iron ore prices. Market participants suggest that any meaningful recovery in prices will depend on a revival in steel demand and improved production activity in the coming weeks.

Meanwhile, iron ore auctions held this week also received a tepid response from market participants. Most lots either remained unsold or were booked at base prices, reflecting the prevailing cautious sentiment among buyers. According to sources, buyers refrained from aggressive bidding amid weak sponge iron demand and expectations of further price corrections in the near term.

Adding to the bearish tone, NMDC lowered its base price for iron ore fines (Fe 56%) in its Donimalai auction today. The miner reduced the base price by INR 450/t, revising it to INR 2,539/t from INR 2,989/t earlier, in an apparent attempt to align with the softening market conditions and stimulate buyer interest.

A Bellary-based miner commented, “We are still waiting and not keen to reduce prices at this stage.” The miner added that most suppliers are taking a wait-and-watch approach, expecting prices to stabilise once demand improves from the steel and sponge iron segments.

On the other hand, a Bellary-based buyer told BigMint, “Prices are likely to come down in the near term as NMDC lowered its base prices for auction. The market remains very dull and inactive at the moment.”

The buyer further noted that most participants are holding back purchases, anticipating additional downward adjustments in the coming days.

Rationale

• No trade was recorded for Fe 57% in this publishing window, and hence, the T1 trade category was accorded 0% weightage.
• Fourteen (14) offers and indicative prices were reported, out of which twelve (12) were considered as T2 trades. These were accorded 100% weightage.

Key market drivers

• NMDC’s auction receives decent response: NMDC conducted iron ore auctions from its Kumaraswamy and Donimalai mines in Karnataka this week. At the Kumaraswamy mines auction held on 29 October, NMDC offered 192,000 t, which was fully booked, with lumps fetching premiums of INR 230-680/t and fines up to INR 680/t. Around 80,000 t of lumps (10-40 mm, Fe 61.12-61.77%) was sold at INR 4,449-4,740/t against a base price of INR 4,060-4,219/t, while 112,000 t of fines (Fe 57.84-61.02%) was booked at INR 2,799-4,110/t compared with a base range of INR 2,789-3,188/t. In the Donimalai auction, 24,000 t of lumps (10-40 mm, Fe 54-55%) were booked at INR 2,827-2,907/t and 40,000 t of fines (Fe 56%) at INR 2,549/t. All prices are inclusive of royalty, DMF, and NMET charges.
• C-DRI prices remain firm w-o-w in Bellary: Prices for sponge iron (CDRI) in Bellary remained stable w-o-w at INR 25,000/t ($282/t) as major mills chose to maintain stable offers despite fluctuating raw material dynamics. The decision to keep prices steady was largely influenced by rising production costs, which limited the scope for any downward revision. Additionally, iron ore lump prices in the region have not shown any decline, primarily due to higher mining. This has further constrained sponge iron producers from reducing their offers, keeping Bellary’s C-DRI market stable over the week despite muted buying interest from downstream steel units.

Karnataka iron ore sales (24-30 October)

Outlook

Iron ore prices in Karnataka are expected to remain under slight pressure in the coming week amid continued weak demand from the steel and sponge iron sectors. However, limited high-grade material availability may prevent any sharp decline. Market participants anticipate prices to stabilise once buying activity picks up.