Leading PSU steel producer, Steel Authority of India Ltd. (SAIL) has sold around 2 mn t of iron ore fines at periodic auctions held in this fiscal year (till Nov), according to data available with SteelMint.
The integrated steel major sold 250,000 t of iron ore fines at auctions in Nov’20. The latest auctions for 72,000 t of Bolani fines (Fe 62.5%) fetched a price of INR 5,500/t (excluding royalty and statutory levies) over a base price of 4,400/t, as reported by SteelMint.
Booking volumes shot up sharply since end-Aug. Only 40,000 t and 60,000 t of ore were booked at the auctions in May’20 and Jun’20 respectively – with Jul’20 witnessing zero bookings despite 200,000 t of material offered from mines under SAIL’s Raw Materials Division (RMD) in Odisha.
However, bookings jumped to over 550,000 t in Sept’20 and Oct’20 from around 350,000 t in Aug’20.
Importantly, a lion’s share of the iron ore offered at the auctions came from SAIL’s Bolani and Barsua mines in Odisha. Eastern India – the country’s steel-making hub – has been experiencing serious tightness in raw materials availability as only a handful of mines started production after the auctions in Odisha earlier this year.
SAIL Chairman A.K. Chaudhary had confirmed in end-Jul’20 that the company was willing to offer higher volumes of iron ore fines at auctions once the market regained momentum after the national lockdown.
Over and above RMD’s mines in Odisha, lesser quantities of fines were supplied by SAIL-BSP’s Dalli mines in Chhattisgarh. Significant rise in booking volumes at the auctions from Sept’20 through to Nov’20 points to ore-consuming downstream mills ramping up manufacturing activity at a time of supply dearth in the market.
A marked demand bounce back amid shortage is reflected in prices of iron ore fines (Fe 62.5%) jumping to INR 5,500/t in Nov’20 from 2, 520-2,550/t in Oct’20 in sync with successive hikes announced by NMDC and Odisha merchant miners.
The government in Sept’19 allowed SAIL to sell 25% of its iron ore fines production in the open market. SAIL RMD mines clocked 22.47 mn t of iron ore production in FY20, while the BSP mines in Chhattisgarh produced 6.79 mn t in the last fiscal.
The steel major has received clearances from the Odisha and Chhattisgarh state governments to sell iron ore fines through auctions, although a formal go-ahead is yet to be issued by the Jharkhand government in this regard.
Moreover, the Union Ministry of Mines has allowed SAIL to sell 70 mn t of dumped low-grade iron ore last year.
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