- Trade activity occurs on need basis
- Market expects price drop in Iron ore
Iron ore prices in Odisha, India, remained stable this week, supported by need-based procurement from steelmakers. Despite sluggish downstream steel demand and a notable decline in pellet and sponge iron prices, merchant miners maintained their offers at last week’s levels. Market activity was moderate, with transactions primarily driven by operational requirements rather than aggressive restocking.
Market participants also await further price direction from the Odisha Mining Corporation (OMC), which is expected to hold its June auction next week on 19th June.
Price update
BigMint’s Odisha iron ore fines (Fe 62%) index remained stable w-o-w at INR 5,050/t ($59/t) ex-mines on 14 June. Notably, deals for around 570,000 t of iron ore (fines and lumps) were recorded by BigMint in Odisha, which were concluded to fulfil the immediate requirements of steelmakers.
Miners kept their offers similar to last week, but some discounted deals were heard in the market.
Market commentary
Market participants pointed to lower finished steel sales as a key factor behind the subdued sentiment. A trader noted, “Steelmakers are cautious with purchases, as finished product prices are under pressure. However, the limited availability of higher-grade iron ore is prompting some need-based buying.”
Steel producers reportedly sourced material from merchant miners only to fulfil urgent requirements while holding back bulk restocking decisions. A buyer stated, “We are waiting for the upcoming OMC auction to finalize our monsoon procurement.”
At OMC’s June auction, likely to be held next week, buyers expect a downward revision in base prices. A major buyer said, “Given the weak response in the last two auctions and the current downtrend in steel tags, we expect OMC to reduce its base prices.”
Miners, for now, appear reluctant to adjust offers before the auction. Further clarity on the market direction is likely to emerge post-auction, especially as most major steel plants are yet to complete monsoon-related iron ore restocking.
Factors affecting iron ore prices
Pellet offers stable w-o-w: Pellet (6-20 mm, Fe 62.5%) prices in Odisha’s Barbil inched down by INR 50/t ($0.5/t) w-o-w to INR 7,900/t ($92/t) loaded to wagon. Pellet (Fe 62.5%, 6-20 mm) prices in Durgapur remained stable w-o-w at INR 8,500/t ($99/t) exw on 13 June.
Sponge iron prices drop w-o-w: According to BigMint’s assessment, sponge iron C-DRI (FeM 80%) prices in Rourkela fell by INR 200/t ($2.5/t) w-o-w to INR 24,100/t ($279/t) on 14 June. Meanwhile, steel billet (100*100 mm) offers in Rourkela dropped by INR 550/t ($7/t) w-o-w to INR 37,250/t ($432/t) today.
Rationale
- T1- Six (6) deals for Fe62% fines were recorded in the publishing window and five (5) were considered for price computation. These were given 50% weightage for index calculation.
- T2 – BigMint received twenty-five (25) offers and indicative prices under the T2 category (offers, indicative, and bids) in this publishing window. Sixteen (16) were taken into consideration and given 50% weightage. To check BigMint’s iron ore assessment, pricing methodology, and specification document, click here.
Outlook
According to BigMint’s analysis, the upcoming OMC auction will be crucial in shaping price trends in the short term. If base prices are revised, it could lead to a correction in merchant offers and spur fresh buying for monsoon needs. However, continued weakness in steel demand may keep overall sentiment subdued, limiting any sharp recovery in ore prices in the near term.
Leave a Reply