- Persistent shortage of high-grade iron ore supports prices
- Demand from sponge iron producers seen recovering gradually
Domestic iron ore prices in Karnataka’s Bellary region remained unchanged w-o-w on 5 February amid positive market sentiment, tight supply, and steady procurement. Prices of low-grade iron ore fines (Fe 57%) remained unchanged, with BigMint’s weekly index assessed at INR 2,700/t ($30/t) ex-mines, excluding taxes, as of 5 February, stable w-o-w. Similarly, Fe 62% iron ore prices inched up by INR 50/t ($0.5/t) to INR 5,100/t ($56/t) ex-mines, indicating firm resistance to any downward correction.
Meanwhile, National Mineral Development Corporation (NMDC), Karnataka, announced base prices for its iron ore e-auction from the Donimalai mines on 5 February 2026. Prices of fines (-10 mm, Fe 56%) and lumps (10-40 mm, Fe 54%) were kept unchanged at INR 2,116/t ($23/t) and INR 1,950/t ($22/t), respectively, compared to the previous revision on 20 January. Prices are exclusive of royalty, DMF, and NMET.
The stability in prices is largely attributed to a persistent shortage of high-grade material in the market. Limited availability, with only a few miners offering Fe 63%+ grades, kept prices elevated. Demand for high-grade ore remained robust, with auctions featuring superior-grade material consistently fetching premiums over lower-grade offerings, underscoring the supply tightness and strong buyer preference for quality material.
Downstream market fundamentals continued to strengthen, lending indirect support to iron ore prices. Finished steel prices climbed up, while sponge iron prices also moved higher, reflecting improving demand conditions. Despite this, sponge iron manufacturers, which are key consumers of iron ore, remained somewhat cautious in their procurement after facing margin pressure over the past four months. With sentiment improving in the sponge iron market, iron ore prices may see stronger upward movement in the near term.
Commenting on the current market scenario, a Bellary-based seller told BigMint, “Iron ore prices have remained unchanged so far, despite a firm uptrend in finished steel prices. Our recent auctions have received a healthy response, with the entire offered quantity getting sold, indicating steady demand at prevailing levels.”
The seller further added, “While buying activity was cautious until January due to financial stress among sponge iron producers, the situation is gradually improving. With the government accelerating infrastructure development and project execution, overall market sentiment has turned positive, and prices are expected to move higher going forward.”
Echoing the optimism, a Bellary-based buyer stated, “Market sentiment has improved significantly, and prices are likely to strengthen further. Direct buying activity is expected to pick up from the coming week, which should provide additional support to the market.”
Rationale
- One (1) 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 ten (10) were considered as T2 trades. These were accorded 100% weightage.
C-DRI prices increase by INR 300/t ($3/t) w-o-w in Bellary: Prices of sponge iron (CDRI) in Bellary rose by INR 300/t ($3/t) w-o-w to INR 26,800/t ($297/t), supported by higher raw material costs and improved demand from major steel-consuming hubs. Rising prices of key inputs such as iron ore and pellets have increased production costs for sponge iron manufacturers, limiting their ability to offer material at discounted levels. As a result, sellers maintained firm price expectations, especially for quality-grade CDRI.
On the demand side, buying interest improved from steel hubs across Karnataka, Tamil Nadu, and parts of Maharashtra, as secondary steelmakers resumed procurement after inventory drawdowns. Improved material movement and steady offtake from rolling mills further supported market sentiment. Buyers were seen placing need-based bookings rather than aggressive bulk purchases, but consistent enquiries helped sustain prices at elevated levels.
Karnataka iron ore sales scenario (30 January-05 February 2026)
Outlook
Low-grade iron ore prices in Karnataka are expected to remain firm next week, with upside potential. Improving downstream fundamentals, strengthening sponge iron prices, tight availability of high-grade material, and increased government spending on infrastructure projects are likely to provide sustained support to raw material prices.
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