SteelMint’s weekly Odisha iron ore fines (Fe 62%) index decreased marginally by INR 50/t to INR 5,950/t (ex-mines, including royalty, DMF and NMET). Similarly, the index for iron ore lump moved down by INR 550/t, w-o-w. Declining global iron ore prices, drop in offers by a few merchant miners and resumption in sales of inventories from the auctioned mining leases have combined to keep prices under pressure.
- Global price drop: Global iron ore prices have witnessed a considerable decline in the past one month on a weak steel demand outlook and steel production curbs in China. The price of benchmark Fe62% Australian fines, after touching dizzying heights of more than $230/tonne (t) around the third week of May’21, have fallen drastically. Prices opened at $93.85/t CNF China for this week and decreased to $89.75/t, CNF China towards the weekend.
- Indian mills raise inquiries for imported fines: Following the steep decline in global prices, inquiries for imported fines (from Australia, etc.) have picked up in India, SteelMint learnt from market sources. Price indications for Fe 62% fines are heard at around INR 6,500-7,000/t landed at Indian ports. Hence, inquiries from integrated steel mills have risen for Jan’22 arrivals considering that it is more cost effective than landed domestic ore, given the higher inland logistics costs.
- Reduction in offers by merchant miners: Odisha’s Essel Mining has lowered iron ore fines Fe 62% offers by INR 700/t to INR 6,300/t ex-mines. The company’s lease for its mine in Odisha’s Koira circle expired in Aug’21 and hence the miner has limited stocks.
- Auctioned mines resume offers to dispose inventories: Merchant miner Serajuddin & Co. has resumed iron ore offers from Odisha. The miner is offering Fe 60.5% fines at INR 4,200/t ex-mines, inclusive of royalty, DMF and NMET. The High Court of Odisha has granted a month’s time to the ex-lessees of auctioned mines to lift their material, following which the miner has resumed offers.
- Drop in pellet prices: Moreover, the recent drop in domestic pellet prices have exerted pressure on iron ore prices. SteelMint’s bi-weekly domestic pellet (Fe 63%) index, PELLEX, has fallen sharply by INR 700/t to INR 11,650/t DAP Raipur on 12 Nov’21.
Rationale
No deal was heard concluded in this publishing window. Hence, the weightage given was 0%. SteelMint received nine (9) offers and indicative prices under T2 trade in this publishing window. Six (06) were taken into consideration and given 100% weightage. To check out SteelMint’s iron ore assessment, pricing methodology and specification documents, Click here
Bids remain stable at NMDC’s Donimalai auction – NMDC held an e-auction from its Donimalai mine on 9 Nov at which 24,000 t was booked out of a total quantity of 540,000 t. Arjas steel Pvt. Ltd. emerged as the largest buyer with 20,000 t, followed by Srikalahasthi Pipes Ltd. with 4,000 t. The iron ore fines (Fe 59%) lot was booked at INR 3,270/t (basic, taxes extra).
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