- Rising steel inventories pressure sponge iron prices
- Lower auction premiums signal cautious buying
Iron ore prices in Karnataka declined this week as the market adjusted to softer auction outcomes and continued pressure across the steel value chain. Trading activity remained limited, with buyers largely restricting purchases to immediate requirements amid weak profitability in sponge iron and finished steel segments.
Low-grade iron ore faced the strongest correction. Fe 57% fines were assessed at around INR 2,700/t ($29/t) ex-mines, as subdued consumption and ample material availability weighed on market sentiment. Despite miners maintaining relatively firm offers, limited transaction activity kept prices under pressure.
Benchmark Fe 62% fines prices also eased by INR 50/t ($0.5/t) w-o-w to around INR 4,950/t ($52/t) ex-mines. Although high-grade ore availability remains relatively tight in the region, the absence of aggressive bidding in NMDC’s Kumaraswamy auctions tempered bullish sentiment and led to a correction in spot market prices. Following the auction results, market participants recalibrated their pricing expectations, resulting in lower tradeable levels for high-grade material.
Auction activity remained limited during the week, with only a few miners offering material. Alongside auction transactions, several direct deals were reported as consumers opted for negotiated purchases to meet near-term requirements. Lower auction premiums and cautious procurement strategies reflected the market’s focus on preserving margins rather than building inventories.
Market participants indicated that purchasing decisions are increasingly being driven by operational economics, with some producers finding pellet-based DRI production more viable than conventional lump-based production under current market conditions.
Commenting on the recent correction, a Bellary-based miner said, “Iron ore prices had increased beyond fundamental levels largely because Kumaraswamy auctions were not taking place. Now that auction volumes are returning regularly, prices are gradually moving back towards their earlier levels.”
A Bellary-based buyer told BigMint, “We expect some further correction in prices and therefore continue to procure only against immediate requirements. Given the current steel market conditions and the approaching monsoon season, there is limited incentive for bulk purchases at this stage.”
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 trades. These were accorded 100% weightage.
C-DRI prices fall by INR 200/t ($2/t) w-o-w in Bellary: Sponge iron (C-DRI) prices in Bellary fell by INR 200/t ($2/t) w-o-w to INR 26,300/t ($278/t). The correction was driven by subdued demand in both domestic and neighbouring markets, amid weak offtake of finished steel products and elevated inventory levels across the supply chain. Market participants also reported increased sales pressure from producers, which has further weighed on sentiment. Given the current demand-supply imbalance, prices may remain under pressure and could witness additional corrections in the near term.
Karnataka iron ore sales scenario (12- 18 June 2026)
Outlook
Karnataka iron ore prices are expected to remain largely stable, with market direction likely to depend on trends in sponge iron and finished steel prices. Any meaningful recovery in iron ore prices will require an improvement in downstream steel demand and profitability. Additionally, the resumption of auction activity by miners could improve material availability and further test buyers’ price acceptance levels. In the absence of stronger steel market fundamentals, buyers are expected to continue with need-based procurement, limiting the scope for any significant upward movement in iron ore prices.
Leave a Reply