India: Odisha iron ore fines index stable w-o-w despite drop in pellet, semi finished prices

• Odisha sees 780,000 t odd deals in pre-monsoon restocking
• Miners keep offers firm, buyers cautious till OMC auction

Iron ore prices in Odisha remained largely stable this week despite pressure from falling pellet and semi-finished steel prices. Market activity remained moderate, with buyers mostly procuring material on need basis, while others preferred a cautious “wait and watch” approach due to the prevailing uncertainty.

BigMint’s Odisha iron ore fines (Fe 62%) index remained stable w-o-w at INR 5,300/t ($62/t) ex-mines on 10 May. Around 80,000 tonnes (t) of higher-grade iron ore fines (Fe 62-65%) were traded in Odisha. Notably, deals of around 780,000 t of iron ore (fines and lumps) were recorded from Odisha this week, which shows active demand for pre-monsoon restocking by steelmakers.

Miners have kept their offers firm, showing resistance to price cuts. A miner from Odisha informed, “Even though the market sentiment is weak, we are receiving sufficient inquiries as many steelmakers are in the process of conducting some pre-monsoon restocking. This has lent some support to prices despite the broader downward pressure in the market.”

Some miners informed that inquiries for iron ore buying slowed, and a few counter prices were lower than the offers.

However, buyers are showing some hesitation for bulk purchases. A steelmaker, commenting on the current market scenario, said: “The current iron ore prices seem high, especially when pellet and sponge iron prices have been falling continuously. This mismatch is discouraging us from placing orders for bulk purchases.”

Adding to the cautious outlook, market participants are now waiting for the base price announcement in the upcoming Odisha Mining Corporation (OMC) May auction. A trader said, “The OMC auction prices are expected to give better clarity on the near-term pricing trend. It will facilitate better sentiments for further purchasing by traders and end-users.”

Traders and producers alike are keeping a close eye on the upcoming auctions and monsoon-related demand shifts to navigate the uncertain outlook.

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 50/t ($0.5/t) w-o-w to INR 8,250/t ($98/t) loaded to wagon. Pellet (Fe 62.5%, 6-20 mm) prices in Durgapur dropped by INR 250/t ($3/t) w-o-w to INR 9,150/t ($107/t) exw on 9 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 400/t ($5/t) w-o-w to INR 25,600/t ($300/t) on 10 May. Meanwhile, steel billet (100*100 mm) offers in Rourkela dropped by INR 200/t ($2.5/t) w-o-w to INR 39,500/t ($462/t) today.

Rationale

• T1- Four (4) 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-four (24) offers and indicative prices under the T2 category (offers, indicative, and bids) in this publishing window. Eighteen (18) 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, the iron ore market is expected to stay volatile amid fragile demand and weaker sentiments across the steel sector. The market will get a clearer picture post-the next OMC auction base price announcements.