SteelMint: Odisha iron ore fines index drops further by INR 400/t, buyers await market clarity

SteelMint’s weekly Odisha iron ore fines index (Fe 62%) fell further by INR 400/t w-o-w to INR 3,600/t ex-mines. Post-export duty hike, many buyers are reluctant to buy material under the current uncertain market conditions and lower plant capacity utilization.

Miners were seen actively offering lower grade ore Fe 57-59% to clear the existing inventories. The deals for high-grade ore continued to remain under pressure on falling pellet prices, anticipated price cuts from the miners and the awaited floor price announcement from OMC. SteelMint’s bi-weekly domestic pellet (Fe 63%) index, PELLEX, stood at INR 8,500/tonne (t) DAP Raipur on 4 June 2022, down by around INR 400/t compared to last week.

Rationale:

• T1- No confirmed deals for high grade (Fe 62%) were heard. Therefore 0% was weightage given in this index.
• T2- SteelMint received fifteen (15) offers and indicative prices under T2 trade deals in this publishing window out of which eleven (11) were taken into consideration and were given 100% weightage. To check SteelMint’s iron ore assessment, pricing methodology and specification documents Click here.

Vedanta subsidiary Electrosteel Steels Ltd (ESL) had scheduled an auction for the sale of fines and lumps (both Fe 58-60%) on 3 June from its Nadidih BICO and Feegrade Mines, Odisha. According to market sources, the entire quantity of 50,000 t fines was booked at around INR 1,200-1,250/t (inclusive of royalty) against the base price of INR 1,100/t while only 5,000 t of lumps were booked out of 40,000 t at the base price of INR 3,100/t. The offered quantity was lowered to 90,000 t at the time of auction against 240,000 t announced earlier.

In another deal, a trader booked around 70,000-80,000 t of Fe 57% grade fines at around INR 1,200-1,250/t from Odisha (ex-mines, including royalty, DMF and NMET) recently this week.

Odisha iron ore prices:

Highlights from other states: 

• Iron ore offers from Lloyds Metals, Maharashtra remain stable: The miner’s offers for fines (Fe 63%) were recorded at INR 4,250-4,500/t FOR Chandrapur, stable w-o-w. Lloyds Metals is operating an iron ore mine, spread over an area of 348.09 hectare in Surjagarh village in Gadchiroli district, Maharashtra. The mine has estimated reserves of 90 million tonnes (mnt).
• NMDC’s iron ore sales fall in May, CG prices may see a drop: It is expected that NMDC, under current circumstances, may revise its iron ore prices downward in its monthly revision which is due in early June. On 25 May, the miner cut offers where fines prices dropped by INR 750/t and that of DR-CLO by INR 720/t. Prices fell to around four-month lows. India’s top iron ore miner NMDC’s production stood at 3.20 mnt in May 2022, up 2% m-o-m from 3.15 mnt in April 2022. However, iron ore sales decreased by 15% m-o-m to 2.65 mnt in May.
• NMDC lowers base price in Karnataka iron ore e-auctions: State-owned NMDC reduced base prices of iron ore by INR 557-724/t for both fines and lump material for its auction scheduled on 31 May from the Donimalai mines. The current floor price of fines (Fe 62%) is INR 3,507/t, while Fe 63% fines prices are at INR 3,663/t (basic, excluding royalty). The base price of lump (Fe 64%) stands at INR 3,918/t (basic, excluding royalty). As per sources, the auction did not receive active response.

In Vedanta’s auction for 72,000 t of iron ore lump (Fe 59.50%) on 2 June 2022, around 56,000 t of material was booked out of the total quantity at the base price of INR 3,775-3,865/t (excluding royalty, including DMF and NMET). The company conducted the e-auction from its mines in Karnataka’s Chitradurga district.