- Limited spot availability strengthens C-DRI offers
- Monsoon disruptions tighten spot availability
Iron ore prices in Karnataka remained firm this week, supported by resilient sponge iron demand and stronger coal market sentiment. Active sponge iron procurement and supportive finished steel prices helped sustain buying interest, although monsoon-related dispatch disruptions and limited availability of premium-grade ore constrained market activity.
According to BigMint’s latest assessment, Fe 57% iron ore fines prices increased by INR 50/t ($0.5/t) w-o-w to INR 2,750/t ($29/t) ex-mines. Lower-grade material continued to face demand pressure, but prices edged up marginally in line with the broader firmness across the raw material market.
Premium-grade ore remains tight
Benchmark Fe 62% iron ore fines prices also increased by INR 50/t ($1/t) w-o-w to INR 5,050/t ($53/t) ex-mines. The increase was supported by strong buyer preference for higher-grade, low-alumina material and limited availability from miners.
Sponge iron producers are increasingly preferring higher-grade ore to improve metallic yield and furnace efficiency. However, buyers said premium-grade material is either available at levels that are currently uneconomical or requires waiting for material purchased in earlier auctions to be dispatched.
Pellet manufacturers have also been actively procuring higher-grade ore at elevated prices to produce higher-grade pellets, adding competition for premium material in the region.
Monsoon disrupts dispatches
Monsoon-related disruptions continued to affect mining and dispatch activity across Karnataka. Material won in earlier auctions remains pending for dispatch, forcing several buyers to rely on existing inventories rather than make fresh purchases.
A buyer said “moisture levels in the material have increased to around 6-7% from about 4% earlier due to the prevailing conditions. The buyer also highlighted dispatch issues and said buyers are reluctant to pay an additional premium for material carrying higher moisture.”
Auction activity remained subdued during the week, with only two auctions reported, both involving lower-grade material. Some miners are also facing difficulties in collecting sufficient material for fresh auctions, further limiting spot availability.
NMDC lowers Donimalai prices
National Mineral Development Corporation (NMDC) reduced list prices for iron ore from its Donimalai mines in Karnataka. Prices of fines (-10 mm, Fe 58%) and lumps (10-40 mm, Fe 58%) were reduced by around INR 160/t ($2/t) to INR 2,832/t ($30/t) and INR 3,214/t ($34/t), respectively.
The prices exclude royalty, DMF and NMET.
The reduction has added pressure to buyer sentiment, particularly as spot auction activity remains weak. However, limited availability of premium-grade material and firm sponge iron demand are providing some support to higher-grade ore prices.
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 twelve (12) were considered as T2 trades. These were accorded 100% weightage.
C-DRI prices rise by INR 550/t ($5.5/t) w-o-w in Bellary: Meanwhile, Bellary’s coal-based sponge iron (C-DRI) prices increased by INR 550/t ($5.5/t) w-o-w to INR 27,700/t ($289/t), primarily driven by the sharp rise in raw material costs, particularly imported coal prices. The increase in coal prices has put pressure on sponge iron manufacturers’ production costs, prompting them to raise CDRI offers accordingly.
However, the support from sponge iron prices is becoming less effective as buying activity has started to weaken. Buyers are increasingly relying on existing inventories, while high raw material costs are limiting the viability of fresh procurement.
Outlook
Iron ore prices in Karnataka may face downward pressure if sponge iron buying remains subdued in the coming weeks. While limited premium-grade availability and monsoon-related dispatch constraints may continue to support higher-grade ore, weaker sponge iron procurement and low auction participation could increasingly weigh on prices. The direction of C-DRI prices and the pace of dispatches from earlier auctions will remain key indicators for the market.
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