India: Iron ore prices decline in Karnataka on subdued steel demand

• Iron ore prices soften amid weak sponge iron and finished steel prices
• NMDC Kumaraswamy auction in focus amid cautious procurement

Karnataka’s iron ore prices declined this week amid subdued demand from the sponge iron and finished steel sectors, with weak downstream market sentiment weighing on raw material procurement. Buyers remained cautious, with purchasing largely restricted by a mismatch between prevailing offers and their desired price levels.

Volatility in the sponge iron market further dampened procurement interest, while limited availability of suitable grades and deteriorating ore quality added to the challenges faced by buyers. Market participants are closely tracking the upcoming NMDC Kumaraswamy auction for further price direction, as sellers and buyers remain divided over price expectations.

According to BigMint’s latest assessment, Fe 57% iron ore fines prices declined by INR 50/t ($0.5/t) w-o-w to INR 2,550/t ($27/t) ex-mines. Demand for low-grade material remained weak due to limited economic viability, high silica content and additional processing requirements, restricting its attractiveness to steelmakers.

Meanwhile, Fe 62% fines prices fell by INR 200/t ($2/t) w-o-w to INR 5,300/t ($56/t) ex-mines. Despite relatively tight availability of suitable high-grade material, prices faced downward pressure amid weakening finished steel demand and cautious procurement. Buyers reported difficulties in sourcing the required grades as some miners previously offering higher-grade ore have shifted towards lower-grade material, further complicating procurement decisions. This grade deterioration has widened the gap between available supplies and buyers’ quality requirements, limiting actual transactions despite the shortage of suitable high-grade ore.

A Bellary-based miner told BigMint: “Demand for higher-grade material persists, but prevailing offers remain on the higher side, with market participants awaiting the outcome of the NMDC Kumaraswamy auction before reassessing their price expectations.”

A buyer said, “Raw material prices are unlikely to witness a significant decline if finished steel prices remain firm, although limited movement of around INR 50-100/t ($0.5-1/t) could occur depending on market conditions. Another buyer highlighted coal availability but said inventories remain limited, adding that iron ore prices need to soften to improve procurement viability.”

Domestic steel market sentiment remained cautious, with subdued finished steel demand and uncertain sponge iron price movements discouraging fresh raw material purchases. Buyers continued to prioritise immediate requirements over inventory building, while sellers faced resistance to prevailing offers. The limited alignment between buying expectations and selling prices kept market activity subdued, with participants awaiting greater clarity from upcoming auctions.

Rationale

• Zero (0) trade via e-auction was recorded for Fe 57% in this publishing window and was not taken into consideration. Hence, the T1 trade category was accorded 0% weightage.
• Fourteen (14) offers and indicative prices were reported, out of which ten (10) were considered as T2. These were accorded 100% weightage.

Influencing factors

• P-DRI prices ease marginally in Bellary: Pellet-based sponge iron (P-DRI) prices declined by INR 50/t ($0.5/t) w-o-w to INR 29,750/t ($314/t), amid limited trading activity and subdued demand during the Dussehra festive period. Buyers largely adopted a wait-and-watch approach, anticipating greater price clarity before making fresh purchases. The subdued sponge iron market continued to weigh on raw material procurement sentiment.
• South African coal prices rise at Indian ports: South African thermal coal prices at Indian ports increased as of 22 October 2026, supported by firmer export offers and higher replacement costs. However, trading activity remained subdued amid festive-season disruptions, cautious buying following earlier bookings and limited fresh spot offers. At Paradip, RB2 (5,500 NAR) prices rose INR 200/t w-o-w to INR 14,550/t, while RB3 (4,800 NAR) increased INR 250/t to INR 12,600/t. At Vizag, RB2 prices gained INR 200/t to INR 14,500/t, while RB3 rose INR 200/t to INR 12,500/t. Despite rising prices, moderate demand and pressure on sponge iron margins continued to limit fresh procurement.
• NMDC Kumaraswamy auction in focus: Market participants are closely monitoring NMDC’s Kumaraswamy auction, alongside additional auctions expected from other miners during the week. The auction outcomes are likely to provide a clearer indication of prevailing demand, price acceptability and the extent of downward pressure on Karnataka iron ore prices.

Outlook

Karnataka iron ore prices are expected to remain under pressure or move sideways in the near term, with subdued finished steel demand, volatile sponge iron prices and cautious procurement limiting market recovery. However, tight availability of suitable high-grade material could provide some support to premium grades. Upcoming auctions, particularly NMDC Kumaraswamy, will be crucial in determining the next price direction.