- Buyers await OMC auction
- Pellet players curtail output weighing on iron ore trades
BigMint’s weekly Odisha iron ore fines (Fe 62%) index decreased by INR 150/t ($2) w-o-w to INR 5,100/t ($62) ex-mines on 9 March 2024. A deal of 25,000 t higher grade fines from merchant miners was heard in this publishing window.
The iron ore offers in Odisha remained downtrend following the subdued export demand and continued drop in the pellet offers owing to surplus supply against demand. Market participants remained cautious about booking material as they were waiting for OMC’s March auction.
As per previous records, OMC generally schedules the auction between 18-20th day of every month.
An Odisha-based buyer said “Almost there is no availability of higher grade fines in the market except OMC. So market awaits for OMC iron ore auction. We heard that other merchant miners will also start to offer the material as they will get permission for FY’25 EC extraction. The current market prices are under pressure despite the material shortage in the market but buyers’ cautious approach took the prices southwards.”
The merchant miners in Odisha had offered lower-grade material in the last phase of FY’24. The pellet prices in Odisha also dropped in the last two to three weeks while a few plants have taken maintenance shutdown. The remaining major plant dropped pellet production due to low exports and domestic demand which may reduce the iron ore offered by miners. Some Odisha-based players are learnt to have curtailed output by 10-15%, while a couple of Indian players have opted for maintenance shutdown.
A pellet maker from Odisha said, “The pellet prices and demand both were very limited in the region and few buyers already surrendered to lift the booked material from the OMC auction in February 2024. However, we are expecting a drop in the base prices of the upcoming OMC auction.”
Rational:
- T1- One deal was taken from Odisha in this publishing window but not taken for price computation. These were given 0% weightage for index calculation.
- T2- BigMint received eleven (11) offers and indicative prices under T2 trade deals in this publishing window. All were taken into consideration and given 100% weightage. To check BigMint’s iron ore assessment, pricing methodology, and specification document Click here.
Factors driving prices
- Pellet prices drop in Barbil: Pellet (6-20 mm, Fe 63%) prices in Odisha’s Barbil decreased marginally by around INR 200/t ($2/t) w-o-w. The current assessment stands at INR 8,100/t ($99/t) loaded to wagon. Pellet (Fe 63%, 6-20 mm) prices in Durgapur remained stable w-o-w at INR 9,050/t ($109/t) exw on 1 March.
- Export demand weak: BigMint’s weekly Indian low-grade iron ore fines (Fe 57%) export index remained stable w-o-w at $74/t FOB east coast on 7 March 2024. A deal of 100,000 t iron ore fines (Fe57%) was concluded at $89/t CFR China in the early days of this week. The iron ore fines export market performed better than raw pellet as inquiries were received from the buyers at a discount on the index. However, only a few deals were concluded this week due to lower feasible prices for the traders and miners.
- Sponge iron prices up in Rourkela: BigMint’s assessment for sponge iron C-DRI (FeM 80%) prices in Rourkela fell by INR 500/t ($6t)w-o-w to INR 26,750/t ($323/t). Meanwhile, steel billet (100*100 mm) prices in Rourkela inched down by INR 1000/t ($12/t)w-o-w to INR 39,400/t ($464/t) today.
Outlook
Iron ore prices in Odisha are likely to remain range-bound following the limited material availability of higher-grade iron ore and a drop in pellet prices. However, few market participants commented that the market will be clearer after the base prices announcement by OMC.