India: Odisha iron ore trade activities slow post-OMC auction, index inches up

• OMC sells around 2.44 mnt iron ore in July auction
• Iron ore fines prices recover post-OMC auction
• Major miners revise iron ore offers this week

Iron ore prices in the Odisha region remained supportive with few active deals by merchant miners after the price revision post-OMC auction. Restocking demand ahead of monsoon has resulted in active bids in OMC’s auction. However, post-OMC auction, despite the downtrend pellet and downstream steel markets along with pressure from the iron ore overseas market, steelmakers are purchasing need-based quantity for the rainy season knowing that the material availability may be tight in the coming days due to rainfall.

BigMint’s Odisha iron ore fines (Fe 62%) index rose by INR 350/tonne (t) w-o-w to INR 4,650/t ($56/t) ex-mines on 27 July, 2024. Around 140,000 t of deals of iron ore across all grades were recorded from the Odisha region post-OMC auction this week.

OMC conducted an auction for 2.5 million tonnes (mnt) of iron ore (1.485 mnt fines and 1.057 mnt lumps, Fe 58-64%) on 20 July. The buyers booked the 1.485 mnt of fines and 0.953 mnt of lumps at INR 2,470-4800/t and 3,770-6,000/t respectively. The bids (weighted average) remained largely stable in the July auction compared to the last month. Notably, the miner had reduced base prices m-o-m by INR 150-250/t for lumps and INR 700-800/t for the majority of fines lots.

A miner said: “The inquiry for the material purchasing has been improved this week as we have revised our offers for the new orders. The buyers are actively looking for iron ore fines material while lumps demand is a little bit slower this week. We are actively making new deals this week in the domestic market following the lower realisation in the seaborne market. The bids in the OMC auction were better for the iron ore fines which supported prices this week also.”

As per sources, major pellet steelmakers had purchased enough material in the OMC auction to restock the inventory for the coming days. The current market dynamics are a little bit uncertain as pellet and finished steel prices are fluctuating in the central-eastern region. Even a few producers dropped the pellet offers post-OMC auction due to selling pressure.

On the other hand, few sources said that lumps prices will remain under pressure as fines demand will increase in the coming days. Following the past year’s trend, steelmakers will prefer to feed pellets over lumps for steelmaking which will shoot up the fines demand in the market. Fines prices rose around INR 200-400/t this week after OMC bids

Rationale:

• T1- Three (3) deals of Fe 62% fines OMC auction were recorded in this publishing window and considered only two (2) for price computation. These were given a 50% weightage for index calculation.
• T2- BigMint received twenty-seven (27) offers and indicative prices under T2 trade deals in this publishing window. Twenty (20) were taken into consideration and given a 50% weightage. To check BigMint’s iron ore assessment, pricing methodology, and specification document Click here

Market highlights:

• Domestic, export pellet prices under pressure: Pellet (6-20 mm, Fe 62.5%) prices in Odisha’s Barbil fell by INR 100/t w-o-w w-o-w. The current assessment stands at INR 7,400/t ($94/t) loaded to wagon. Pellet (Fe 62.5%, 6-20 mm) prices in Durgapur inched down by INR 50/t w-o-w to INR 8,350/t ($107/t) exw on 26 July. BigMint’s India pellet (Fe 63%, 3% Al) export index (FOB east coast) decreased by $4/t w-o-w to $93/t on 26 July 2024.
• Fines export prices drop w-o-w: BigMint’s weekly Indian low-grade iron ore fines (Fe 57%) export index decreased by $2/t w-o-w to $56.5/t FOB east coast on 25 July 2024. The index has continued its downward march to hit over a three-month low. No deals relating to Fe57% fines were concluded from India in this publishing window as exporters remained cautious about selling their material in a downtrend market.
• Sponge iron prices up w-o-w: BigMint’s assessment for sponge iron C-DRI (FeM 80%) prices in Rourkela rose by INR 150/t w-o-w to INR 26,200/t ($308/t) on 27 July. Meanwhile, steel billet (100*100 mm) prices in Rourkela dropped by INR 200/t ($2.5/t) w-o-w to INR 38,200/t ($459/t) today.

Outlook

As per BigMint’s analysis, iron ore prices in Odisha may remain stable in the coming days following the expectation of fresh trades by merchant miners at revised offers. A few miners’ deals were under negotiation this week which may conclude in the coming days.

A trader said that higher grade fines (Fe62+%) availability is tight in the Odisha region as only OMC sold this particular grade in its auction while merchant miners are not offering higher grade fines in the market. We can see fines shortage in the market due to mines operation difficulties in the next few week following rain.