- OMC reduces base prices for May’25 auction
- Pellet, sponge tags fall, buyers remain cautious
Iron ore prices in Odisha declined this week, driven by muted market sentiment and reduced offers from key miners. The ongoing weakness in the pellet and sponge iron markets exerted further downward pressure on iron ore prices in the region. Additionally, market participants awaited price clarity from the upcoming iron ore auction from the Odisha Mining Corporation (OMC), scheduled for 19 May 2025.
BigMint’s Odisha iron ore fines (Fe 62%) index fell by INR 200/tonne (t) ($2.5/t) w-o-w to INR 5,100/t ($60/t) ex-mines on 17 May. Around 50,000 t of higher-grade iron ore fines (Fe 62-65%) were traded in Odisha. Notably, deals for around 500,000 t of iron ore (fines and lumps) were recorded from Odisha this week, which were concluded at lower, discounted prices.
Market activity remained moderate, as buyers opted for need-based purchases, taking advantage of the declining prices. However, bulk bookings were absent. A buyer informed BigMint, “With prices showing a downtrend and demand subdued, we are procuring only on need basis.”
Adding to the cautious approach is the anticipation surrounding the upcoming OMC auction. OMC has scheduled an auction for 2.353 mnt of iron ore (1.025 mnt of lumps and 1.328 mnt of fines) on 19 May. The miner reduced base prices by INR 50-100/t ($0.5-1/t) and INR 450/t ($5/t) m-o-m for fines and lumps, respectively, amid weak demand in downstream segments. A drop in sponge iron prices m-o-m also weighed on OMC’s offers.
Many market participants remained inactive, expecting to gauge pricing direction from the auction results. A trader commented, “The OMC auction will be critical in setting the tone for the market going forward. Until then, sentiments will remain under pressure.”
Pellet and sponge iron prices, which have also declined, continued to weigh on buyer confidence. “The downstream weakness is feeding back into iron ore demand. Unless we see some improvement in steel prices, the outlook will remain bleak.”
A prominent miner from Odisha said that although there were inquiries, buyers wanted to procure material at discounted prices. “We recently concluded some deals at lower prices and are waiting for OMC’s auction results to make fresh offers.”
Factors affecting iron ore prices
- Pellet offers fall w-o-w: Pellet (6-20 mm, Fe 62.5%) prices in Odisha’s Barbil fell by INR 150/t ($2/t) w-o-w to INR 8,100/t ($95/t) loaded to wagon. Pellet (Fe 62.5%, 6-20 mm) prices in Durgapur dropped by INR 150/t ($2/t) w-o-w to INR 9,000/t ($105/t) exw on 16 May.
- Sponge iron prices drop w-o-w: According to BigMint’s assessment, sponge iron C-DRI (FeM 80%) prices in Rourkela fell by INR 300/t ($3.5/t) w-o-w to INR 25,300/t ($296/t) on 17 May. Meanwhile, steel billet (100*100 mm) offers in Rourkela dropped by INR 400/t ($5/t) w-o-w to INR 39,100/t ($457/t) today.
Rationale
- T1- Three (3) deals for Fe62% fines were recorded in the publishing window, and two (2) were considered for price computation and given 50% weightage for index calculation.
- T2 – BigMint received twenty-five (25) offers and indicative prices under the T2 category (offers, indicative, and bids) in this publishing window. Sixteen (16) were taken into consideration and given 50% weightage. To check BigMint’s iron ore assessment, pricing methodology, and specification document, click here.
Outlook
According to BigMint’s analysis, the future direction of the Odisha iron ore market will become clearer next week, following the OMC auction result. A drop in base prices may give steelmakers an incentive to start their pre-monsoon restocking of raw materials.
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