India: Low-grade iron ore prices stable in Karnataka; all eyes on NMDC auction

• Miners under pressure amid sluggish trades
• Exports, sponge, pellet market weigh on offers
• Market awaits NMDC auction results

Domestic low-grade iron ore fines (Fe 57%) prices continued to remain under pressure this week in Karnataka’s Bellary. BigMint’s weekly index for low-grade iron ore fines (Fe 57%) stood at INR 2,700 tonne/t ($32/t) ex-mines Bellary (excluding taxes), stable, w-o-w.

Absence of active trades and bearish sentiments in the export as well as domestic markets has forced miners to keep their offers at lower levels. In the same line, a Bellary-based buyer told BigMint, “Miners have reduced their offers due to a stagnant export market, leading them to redirect materials to pellet producers, who are unwilling to purchase at previous rates amidst weak market sentiments. Additionally, auctions are not receiving active responses even at the current lower levels.”

Meanwhile, the market is eagerly waiting for the upcoming NMDC auction to get better price clarity. Talking about the same, another major miner from the region said, “Other miners are also under pressure. Demand is there but no production due to the monsoons and sluggish market sentiments in the downstream segment are weighing on iron ore prices. While demand for raw materials persists, buyers are hesitant to make purchases at the currently quoted prices..”

NMDC has scheduled 244,000 t of iron ore auction on 17 August, 2024. Of the total quantity, 128,000 t are fines (Fe 59.12-63.59%) and 116,000 t are lumps (10-40 mm, Fe 58.73-64.28%). Prices are yet to be declared by the miner which will be on ex-mines basis, including royalty, DMF & NMET.

Rationale:

• Zero (0) trade was recorded in this publishing window and hence, accorded 0% weightage.
• Fourteen (14) offers and indicative prices were reported, and all were considered as T2 trades, receiving 100% weightage.

What factors forced miners to drop offers?

• Bellary C-DRI prices down w-o-w: Sponge iron (CDRI) prices in Bellary, Karnataka fell by INR 100/t ($1/t) w-o-w. Prices decreased due to limited buying influenced by slow movement in the semi-finished and finished steel segments.
• Low-grade export market under pressure: BigMint’s weekly Indian low-grade iron ore fines (Fe 57%) export index decreased by $1.5/t w-o-w to $54/t FOB east coast on 14 August, 2024. Indian iron ore seaborne market remained under pressure in the last few days amid lower demand from the Chinese steel mills due to ongoing production cuts. Meanwhile, the higher inventory levels at Chinese ports kept buyers away from the market leading to a drop in the transected volumes and prices.

Karnataka iron ore sales scenario (9-14 August, 2024)

Outlook

Domestic low-grade iron ore prices are likely to remain volatile, with uncertainty in price movement. However, market sentiments are expected to improve post-monsoon in the region, one of the buyers told BigMint. “Trades will pick up further post-monsoon, once miners start production actively which will improve the supply side,” the buyer said. Meanwhile, the market is awaiting NMDC’s iron ore auction outcome for price clarity.