India: Karnataka iron ore e-auction sales hit eight-month high in Aug

Karnataka’s monthly iron ore e-auction sales have risen to an eight-month high in the month of Aug’20. The total allotted quantity in Aug’20 was recorded at 3.16 mn t when compared to 3.13 mn t in Jun’20.

JSW Steel’s sourcing remains stable-:  JSW Steel – the largest buyer of Karnataka iron ore bought 53% to the total iron ore sold in Karnataka e-auction last month. In the month of Aug’20 JSW sourced around 1.68 mn t iron ore, almost similar to last month’s sourcing.

Out of 1.68 mn t iron ore sourced by JSW, Mineral enterprises Ltd. remained the largest supplier at 0.46 mn t. Vedanta being the second-largest iron ore supplier to JSW Steel but supply decreased sharply by 42% to 0.29 mn t in Aug’20 against 0.5 mn t in Jul’20.

NMDC supplied 0.26 mn t down sharply by 62% against 0.69 mn t last month and thus contributed only 16% of total JSW sourcing.

Other suppliers to JSW Steel were Karnataka State Minerals Corporation Ltd at 0.16 mn t, Ramanadurga Iron Ore Mine at 0.1 mn t, and others 0.42 mn t.

NMDC sales down sharply by 60% m-o-m -: NMDC sold 0.31 mn t iron ore via Karnataka e-auctions in Aug’ 20 decreased by 60% against last month at 0.79 mn t. With operations remaining on hold in Donimalai, all the sales made were from its Kumaraswamy mines.

In a major recent development, the Karnataka government has agreed to let India’s largest iron ore miner NMDC to resume operations at Donimalai after the central government agreed to increase royalty rates from 15% to 37.5% that is around 22.5% over existing rates.

Mineral Enterprises Ltd. stood the largest iron ore supplier in Karnataka e-auction in the month of Aug’20 with 0.47 mn t sales followed by Vedanta Ltd at 0.44 mn t in Aug’20.

Buyer-wise allotted quantity of Aug’20 iron ore e-auctions:

Qty in t
Source: GOK, DMG, SteelMint Research

Highlights of Aug’20 Karnataka iron ore e-auctions-:

•  Western India based steel maker- Mono steel procured iron ore first time from Karnataka e-auction since the SteelMint maintaining records of an e-auction. The company procured around 20,000 t lumps (Fe 60-64.2%) at INR 2,913 – 3,860/t in the last month of Aug from Vedanta and R.Praveen Chandra.
• Another western India based pellet maker – Jindal SAW bought 52,000 t iron ore, out of which fines around 32,000 t (Fe 63.11-63.85%) at INR 2,690 – 2,970/t and lumps around 20,000 t (Fe 64.34%) at INR 3,660/t from P. Balasubba Setty & Son in Aug’20.
• Vedanta procured 16,000 t iron ore lumps (Fe 64.22-65%) at INR 3,350-3,380/t. (Prices mentioned are basic, taxes extra).