- Improved sponge iron prices support market sentiment
- Healthy response in NMDC’s auctions lifts seller confidence
Karnataka’s iron ore market remained firm during the week ended 23 July, supported by higher sponge iron and finished steel prices, even as trading activity remained selective. The improvement in downstream steel prices, coupled with rising coal-based sponge iron prices, strengthened seller sentiment and enabled miners to maintain firm offers. However, buying continued to be concentrated in premium-grade ore, while abundant availability and quality concerns kept demand for lower-grade material subdued.
According to BigMint’s latest assessment, Fe 57% iron ore fines remained unchanged w-o-w at INR 2,550/t ($26/t) ex-mines. Despite improving sentiment across the steel value chain, ample availability of lower-grade fines and limited buyer interest prevented any upward movement in prices. Sponge iron producers continued to favour higher-grade ore to improve kiln productivity and reduce coke and coal consumption, while procurement of low-grade material remained largely need-based due to its higher alumina and silica content.
Benchmark Fe 62% iron ore fines also held steady at INR 5,000/t ($52/t) ex-mines. Demand for premium-grade ore remained healthy as supply continued to tighten across Karnataka. Market participants said only a limited number of mining leases are consistently producing high-grade ore, while dispatch constraints at some mines and the gradual deterioration in ore quality at mature deposits have further reduced spot availability. This imbalance between supply and demand continued to support prices for higher-grade material.
Auction activity remained limited during the week, with only a few lots offered. Nevertheless, higher-grade auctions attracted aggressive bidding and stronger premiums, reflecting buyers’ preference for assured quality and consistent supply. In contrast, lower-grade auctions continued to witness muted participation as buyers remained cautious over lower recoveries and higher processing costs.
Market sentiment improved further following NMDC’s latest auction, where premium-grade ore witnessed robust bidding amid regional supply tightness. However, other market transactions largely continued at prevailing price levels, indicating that the auction response has strengthened confidence rather than triggering an immediate rise in spot prices. Several market participants also pointed to dispatch constraints by some miners, which have further tightened the availability of premium-grade material.
A Bellary-based miner told BigMint, “We are maintaining firm offers. The healthy response seen in NMDC’s recent auctions has strengthened confidence in the market, and if this trend continues, it could provide further support to prices.”
However, downstream consumers remained cautious. A Bellary-based sponge iron producer said, “The increase in sponge iron prices is mainly being driven by higher coal costs rather than stronger demand. Demand is moderate, and we are currently consuming existing inventories instead of making fresh purchases. Buyers continue to prefer NMDC auctions because they offer consistent quality and assured quantities.”
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.
- Thirteen (13) offers and indicative prices were reported, out of which eleven (11) were considered as T2 trades. These were accorded 100% weightage.
C-DRI prices rise by INR 350/t ($3.5/t) w-o-w in Bellary: Bellary’s coal-based sponge iron (C-DRI) prices increased by INR 350/t ($2.5/t) w-o-w to INR 26,500/t ($274/t). The rise was primarily driven by constrained supply, as several coal-based sponge iron units either reduced operating rates or shifted production towards pellet-based DRI owing to changing raw material economics. Higher thermal coal costs also lifted production expenses, prompting manufacturers to raise offers. Although downstream demand remained moderate, the tighter availability of C-DRI supported regional sponge iron prices, which in turn helped maintain firm sentiment in Karnataka’s iron ore market.
Karnataka iron ore sales scenario (17- 23 July 2026)
Outlook
Karnataka’s iron ore prices are expected to remain stable to firm over the coming week. Rising sponge iron production costs, driven by elevated coal prices, and continued tightness in premium-grade ore availability are likely to support miner offers. Market participants also expect more miners to participate in upcoming auctions, which could improve spot availability and provide better price discovery. However, fresh buying is expected to remain largely need-based.
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