SteelMint: Odisha iron ore fines index edges down as pellet, sponge iron prices fall

SteelMint’s weekly Odisha iron ore fines index (Fe 62%) has edged down further by INR 150/tonne (t) w-o-w to INR 6,150/t ex-mines. Drop in pellet prices and the recent decline in sponge iron prices kept a majority of buyers away from making a new round of bookings for iron ore.

Rationale:

• T1- No confirmed deal was heard this week; therefore, weightage kept at nil for this week.
• T2- SteelMint received nine (09) offers and indicative prices under T2 trades in this publishing window. Seven (7) were taken into consideration and given 100% weightage. To check SteelMint’s iron ore assessment, pricing methodology, and specification documents Click here

Factors impacting iron ore prices –

• Drop in pellet prices – Pellet prices in Durgapur have decreased, as per SteelMint assessment. The current assessment for pellet (Fe 63%) stands at INR 11,600/t exw Durgapur, down INR 1,300/t compared to the last assessment of INR 12,900/t on 22 March as previous offers were not feasible.
• Decline in sponge iron prices – SteelMint’s daily sponge iron, CDRI, index is assessed at INR 41,000/tonne (t) (- INR 1,000) exw Rourkela on 25 March. The index fell owing to weak buying and correction in semi-finished steel prices. Hence, buyers held back from taking positions amid unclear trends, sources informed SteelMint.
• Active bookings in last OMC auction – At Odisha Mining Corporation’s (OMC) iron ore lump auction on 15 March, 785,000 t, or 93% of the total quantity of 841,000 t, received bids. The auction received bids lower by up to INR 1,250/t as against the last auction in mid-Feb. OMC had scheduled an iron ore fines auction on 15 March in which out of a total of 1.147 mnt of material, 1.145 mnt (99%) received bids.

DR-CLO lots in NMDC’s Chhattisgarh iron ore auction receive active response- National Mineral Development Corporation (NMDC) had scheduled two iron ore auctions from Chhattisgarh on 23 March. The material offered was DR-CLO, Baila lump, fines and ROM. The entire lot of 16,800 t of DR-CLO (10-40mm, Fe 67%) was booked at a premium of 33% (around INR 2,400/t) against the base price of INR 7,254/t. However, the lump and fines lots received flat bids, sources said.

Market sources expect the miner to revise prices in the coming week. Buyers are expecting a downward correction in prices.

Karnataka auction by private miners receive positive response – Private miners in Karnataka conducted an iron ore e-auction on 22 March by private miners at which 309,000 t was booked out of a total of 363,000 t. JSW Steel was the largest buyer at 192,000 t followed by Rai Bahadur Seth Shreeram Narasingdas Private Limited at 64,000 t. Bids for iron ore fines (Fe 55.4%) offered by Veerabhadrappa Sangappa & Company increased to INR 2,100/t from INR 2,090/t in the previous auction held on 9 March.