- Eastern region sees active demand, trading
- OMC hikes base prices, premium may rise
Iron ore prices in the eastern region continued to hold firm, supported by active trading and consistent demand from buyers. Market participants informed that miners kept their offers stable while successfully concluding deals in decent volumes. Additionally, Odisha Mining Corporation (OMC) has scheduled its iron ore auction with a notable hike in base prices, which has created at additional market buzz.
BigMint’s Odisha iron ore fines (Fe 62%) index inched up by INR 50/t ($0.5/t) w-o-w to INR 5,250/t ($62/t) ex-mines on 19 April. Around 35,000 t of iron ore fines (Fe 62-65%) deals were concluded in Odisha. Notably, deals of around 450,000 t of iron ore (fines and lumps) were recorded from Odisha this week.
A market participant informed, “Miners are seeing good response from medium-scale buyers who are actively procuring material for need-based requirements. The offers are steady, and there is no pressure to lower them as demand is healthy.”
Steelmakers are now closely watching the outcome of today’s OMC auction, especially as higher-grade ore has been witnessing increased inquiries at the current offer levels. While traders and small buyers are sourcing directly from miners, major steel plants are expected to participate aggressively in the OMC bidding.
A miner said, “We have closed the sales and are waiting for the OMC’s auction results for the fresh offers and will reopen our sales accordingly.”
OMC has scheduled an auction for 2.676 mnt of iron ore (1.141 mnt lumps and 1.535 mnt fines) today, and base prices have increased by INR 100/t and INR 350/t m-o-m for fines and lumps, respectively. Prices rose amid tight availability of higher-grade iron ore in the region. Hike in sponge iron prices m-o-m also supported the move.
A trader commented: “Everyone is eyeing the auction results. We may see premiums over the base price, similar to or even higher than last month’s.”
Some market participants expressed concern about the decline in steel prices, which has contributed to negative sentiment. However, due to restocking driven by the early monsoon, raw material prices are expected to remain stable. This stability is likely to be reflected in the upcoming OMC auction as well.
Further clarity on price direction is expected next week, post-auction, as market participants await signals from the bidding behaviour and buying interest.
Factors affecting iron ore prices
- Pellet offers stable w-o-w: Pellet (6-20 mm, Fe 62.5%) prices in Odisha’s Barbil remained stable w-o-w at INR 8,500/t ($99/t) loaded to wagon. Pellet (Fe 62.5%, 6-20 mm) prices in Durgapur were also range-bound w-o-w at INR 9,500/t ($111/t) exw on 18 April.
- Sponge iron prices down w-o-w: According to BigMint’s assessment, sponge iron C-DRI (FeM 80%) prices in Rourkela fell by INR 500/t ($6/t) w-o-w to INR 27,000/t ($316/t) on 19 April. Meanwhile, steel billet (100*100 mm) offers in Rourkela dropped by INR 600/t ($7/t) w-o-w to INR 40,300/t ($472/t) today.
Rationale
- T1- Two (2) deals of Fe62% fines were recorded in the publishing window, and both were considered for price computation and given a 50% weightage for index calculation.
- T2 – BigMint received Nineteen (19) offers and indicative prices under the T2 category (offers, indicative, and bids) in this publishing window. Fourteen (14) were taken into consideration and given a 50% weightage. To check BigMint’s iron ore assessment, pricing methodology, and specification document, click here.
Outlook
According to BigMint’s analysis, iron ore prices will get a clearer picture next week with new offers post-OMC auction. Meanwhile, the premium is expected to be hiked in the auction, which may help support iron ore prices in Odisha.
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