- Market uncertainty keeps sponge iron trade subdued
- Steel makers adopt wait-and-watch strategy
Low-grade fines (Fe 57%) remained firmly anchored at INR 2,650/t ($28/t) ex-mines, while Fe 62% fines inched up by INR 50/t ($0.5/t) to INR 5,150/t ($55/t), underscoring notable price resilience on 26 March. Karnataka’s iron ore market continued to display a remarkably stable and firm trend this week, even as the sponge iron segment remained under visible stress. Weak sentiment in sponge iron and subdued buying interest—particularly for low-grade material kept demand muted; however, prices resisted any meaningful correction, reflecting a fundamentally supported market with limited downside risk.
Market activity, however, was largely lacklustre, with very few auctions reported during the week. The auctions that did take place struggled to gain traction, with most lots either clearing at base prices or remaining unsold altogether. Buyers maintained a highly cautious and selective approach, which significantly weighed on auction outcomes. Even higher-grade material failed to attract aggressive bids, highlighting the depth of subdued sentiment. The weakening trend in the sponge iron market compared to the previous week further dampened demand, directly impacting raw material procurement decisions.
Adding to the subdued buying interest, a structural shift within the sponge iron segment is becoming increasingly evident. Several players are gradually transitioning from CDRI to PDRI routes in response to prevailing market dynamics. Pellets are being preferred over iron ore fines, as scrap availability critical for CDRI remains tight, while coal prices continue to surge amid ongoing geopolitical tensions. This shift has further curtailed direct iron ore consumption, amplifying the cautious procurement environment.
Reflecting the challenging ground reality, a Bellary-based miner indicated that “weak demand for low-grade material has compelled them to consider lowering base prices in upcoming auctions to stimulate buyer participation, as current offerings are struggling to fetch response”. On the demand side, a Bellary-based buyer noted that “rising steel prices driven by elevated coal costs could keep iron ore prices either stable or under slight downward pressure in the near term.”
Meanwhile, the market remains in a wait-and-watch mode, with participants closely tracking the upcoming auction from NMDC’s Donimalai complex, which is expected to provide clearer direction and set the tone for near-term price movements.
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.
- Sixteen (16) offers and indicative prices were reported, out of which fourteen (14) 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: Prices of sponge iron (CDRI) in Bellary fell by INR 200/t ($2/t) w-o-w to INR 27,700/t ($294/t) primarily driven by cautious buying sentiment in the market. Steel manufacturers are adopting a wait-and-watch approach and holding back their purchases amid prevailing uncertainty in finished steel demand.
Additionally, higher offer levels from sponge iron producers have not been well accepted by buyers, leading to reduced transaction activity. This disconnect between buyer expectations and seller quotations has further contributed to the softening of prices.
Karnataka iron ore sales scenario (20-26 March 2026)
Outlook
Karnataka’s low-grade iron ore prices are expected to remain largely rangebound in the near term, amid weakening sponge iron sentiment and subdued demand. However, higher-grade material may witness slight upward support due to limited availability and relatively better demand fundamentals.
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