India: Odisha iron ore fines index stable w-o-w amid fall in pellet-sponge prices

• Falling steel prices make buyers cautious
• NMDC hike may prop up eastern zone prices

Iron ore prices in the Odisha region remained largely stable this week as trading activity continued at a moderate pace. Market participants informed that miners kept offers unchanged w-o-w, but inquiries slowed amid a decline in sponge iron and pellet prices across central and eastern India.

BigMint’s Odisha iron ore fines (Fe 62%) index remained stable w-o-w at INR 5,300/t ($62/t) ex-mines on 3 May. Around 75,000 tonnes (t) of higher-grade iron ore fines (Fe 62-65%) were traded in Odisha. Notably, deals of around 600,000 t of iron ore (fines and lumps) were recorded from Odisha this week, amid moderate trading activity.

A miner informed, “Though we are actively offering material, buyers are not showing much urgency. They are cautious due to falling steel prices.”

Despite subdued demand, some buyers proceeded with need-based bookings to secure material ahead of the upcoming monsoon season. A buyer, commenting on the current market scenario, said: “We decided to book now rather than rush later during the monsoon disruptions.”

The steelmakers are slightly cautious about the bulk purchasing as sponge iron and semi-finished steel prices have sharply declined in the last two weeks, which further dampened the raw material market sentiments.

However, Chhattisgarh-based miner NMDC recently increased its iron ore prices for May delivery, which may support prices in the eastern region in the near term as well.

Export activity remained minimal as Chinese markets were closed for Labour Day holidays until 5 May. Additionally, soft sea freights and bearish sentiments in global markets led exporters to stay away from procuring low-grade material.

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 200/t ($2.5/t) w-o-w to INR 8,300/t ($98/t) loaded to wagon. Pellet (Fe 62.5%, 6-20 mm) prices in Durgapur inched down by INR 50/t ($0.5/t) w-o-w to INR 9,400/t ($111/t) exw on 2 May.
• Sponge iron prices down w-o-w: According to BigMint’s assessment, sponge iron C-DRI (FeM 80%) prices in Rourkela fell by INR 700/t ($8/t) w-o-w to INR 26,000/t ($307/t) on 3 May. Meanwhile, steel billet (100*100 mm) offers in Rourkela dropped by INR 200/t ($2.5/t) w-o-w to INR 39,700/t ($469/t) today.

Rationale

• T1- Three (3) deals of Fe62% fines were recorded in the publishing window, and two (2) were considered for price computation and given a 50% weightage for index calculation.
• T2 – BigMint received twenty-seven (27) offers and indicative prices under the T2 category (offers, indicative, and bids) in this publishing window. Twenty-two (22) 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 are expected to remain range-bound until the next OMC auction. Transactions are likely to continue on need-only basis as market participants await clearer price directions in the downstream steel sector.