- Coal price surge lifts sponge iron production costs
- Higher-grade ore gains support amid limited availability
Karnataka iron ore prices remained supportive amid elevated coal prices, firm sponge iron prices and healthy downstream demand. However, market sentiment remained sharply grade-sensitive, with low-grade fines continuing to face demand constraints, while limited availability and strong preference for higher-grade, low-alumina material supported prices.
According to BigMint’s latest assessment, Fe 57% iron ore fines prices remained stable w-o-w at INR 2,750/t ($29/t) ex-mines. This was in contrast to the negligible response seen in some earlier low-grade auctions.
Meanwhile, Fe 62% fines prices increased by INR 50/t w-o-w to INR 5,200/t ($54/t) ex-mines, supported by limited availability of quality ore and firm demand for higher-grade material. Market participants reported that buyers are increasingly willing to pay premiums for suitable material, while others are switching to pellets amid difficulties in securing quality ore required for sponge iron production.
The firming trend in iron ore is also being reinforced by higher coal costs, which have pushed up sponge iron production costs. Sponge iron prices have consequently moved higher, as producers continue to pass on rising input costs. Market participants noted that elevated coal, iron ore and natural gas costs are keeping overall production costs high, limiting profitability despite firm finished steel and sponge iron prices.
Auction activity in Karnataka remained moderate, with predominantly low-grade material offered during the week. While responses remained subdued compared with higher-grade auctions, participation improved from earlier rounds as buyers actively sought available material. However, dispatch and delivery constraints continue to add to procurement challenges.
A Bellary-based buyer said that “market demand remains healthy, but elevated coal and iron ore prices are putting significant pressure on working capital and keeping margins under strain”.
“Market sentiment remains positive, but profitability continues to be under pressure due to sharply higher input costs. Coal prices remain elevated, while natural gas prices have nearly doubled to record levels. Rising RB1 prices are adding further to costs. In the domestic market, although auctions are taking place, material deliveries remain delayed.” said a buyer.
Meanwhile, market participants are closely awaiting NMDC’s Kumaraswamy auction scheduled for tomorrow, which is expected to provide clearer price direction and better price visibility for higher-grade iron ore in the Karnataka market.
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.
- Fifteen (15) offers and indicative prices were reported, out of which thirteen (13) were considered as T2 trades. These were accorded 100% weightage.
C-DRI prices rise sharply by INR 800/t ($8/t) w-o-w in Bellary: Meanwhile, Bellary’s lump-based sponge iron (C-DRI) prices increased by INR 800/t ($8/t) w-o-w to INR 31,000/t ($325/t),supported primarily by a sharp rise in raw material costs. The increase in input costs, particularly sponge-making raw materials such as Iron Ore and coal, has raised production costs for CDRI manufacturers, prompting producers to revise offer prices upward. The price movement was further supported by adequate buying interest from steel smelters in neighbouring markets, where consumers continued to procure material to meet their regular production requirements.
Imported coal prices rise amid higher global costs: South African thermal coal prices at Indian ports strengthened sharply on 10 September, supported by tighter supply, higher global energy costs and firm steel demand. Higher oil and natural gas prices, along with supply disruptions, increased global replacement costs and pushed up offers across Indian ports. Despite healthy enquiries, buyers remained cautious at elevated price levels.
Karnataka iron ore sales scenario (04- 10 September 2026)
Outlook
Karnataka iron ore prices are expected to remain firm to steady in the near term, with the direction largely dependent on the outcome of NMDC’s Kumaraswamy auction and demand for sponge iron. Limited availability of higher-grade ore, elevated coal costs and firm C-DRI prices are likely to provide support, while weak demand for low-grade fines may limit broader price gains.
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