- Pellet, sponge iron, steel prices under pressure
- Market awaits upcoming OMC iron ore auction scheduled next week
Iron ore prices in Odisha remained under pressure this week as the domestic pellet, sponge iron and steel markets continued their downtrend. Market participants attribute this to a lack of confidence among steelmakers in procuring raw materials at prevailing rates. The ongoing slump in iron ore export prices further weighed on raw material prices in the eastern region.
BigMint’s Odisha iron ore fines (Fe 62%) index dropped by INR 100/t ($1/t) w-o-w to INR 5,350/t ($63/t) ex-mines on 16 November 2024. Deals of around 35,200 t of Fe 61-62% fines were recorded by BigMint this week in Odisha. Overall, deals of approximately 300,000 t iron ore (fines and lumps) were reported in the region as some steelmakers purchased raw materials from Odisha miners to meet their immediate needs.
Miners, despite maintaining similar offers, have relaxed prices to encourage trades. However, transactions remained slowed as buyers awaited the OMC auction scheduled for 20 November. Interestingly, some miners have halted sales this week after meeting their dispatch targets earlier, which has led to material shortage in the region.
A trader said, “The current market dynamics suggest that OMC may lower its base price in the upcoming auction. Steelmakers are cautious, waiting for the auction results before committing to bulk purchases. The sharp drop of around INR 3,000/t in sponge iron and steel prices since the last OMC auction has diminished market confidence.”
Steelmakers said the market’s direction will become clearer post auction. The miners will re-evaluate and adjust offers based on the auction outcome and its impact on demand.
Rationale
- T1 – Four (4) deals of Fe 62% fines were recorded in the publishing window. All were considered for price computation and were given a 50% weightage for index calculation.
- T2 – BigMint received twenty-four (24) offers and indicative prices under the T2 category (offers, indicative, and bids) in this publishing window. Twenty-two (22) 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
- Pellet prices range-bound w-o-w: Pellet prices in the domestic and export markets remained under pressure this week. Pellet (6-20 mm, Fe 62.5%) prices in Odisha’s Barbil fell by INR 50/t ($0.5/t) w-o-w to INR 8,400/t ($100/t) loaded to wagon. Pellet (Fe 62.5%, 6-20 mm) prices in Durgapur remained stable w-o-w at INR 9,700/t ($115/t) exw on 8 November. BigMint’s India pellet (Fe 63%, 3% Al) export index (FOB east coast) fell sharply by $6 w-o-w to $92.5/t on 15 November.
- Fines export prices fall w-o-w: BigMint’s bi-weekly Indian low-grade iron ore fines (Fe 57%) export index decreased by $6/tonne (t) w-o-w to $59/t FOB east coast, India, on 14 November. Last week, a miner from Odisha had concluded a deal for 50,000 t of fines (Fe57%) at $66/t FOB Paradip, while a trader sold around 55,000 t of fines (Fe57%) at $64/t FOB east coast. A prominent miner from Odisha sold over 300,000 t of fines (Fe57%) in November but deals are yet to be confirmed by the parties concerned.
- Sponge iron prices drop w-o-w: According to BigMint’s assessment, sponge iron C-DRI (FeM 80%) prices in Rourkela fell sharply by INR 1,050/t ($12/t) w-o-w to INR 26,750/t ($317/t) on 16 November. Meanwhile, steel billet (100*100 mm) offers in Rourkela decreased by INR 1,000/t ($12/t) w-o-w to INR 37,750/t ($447/t) today.
Outlook
According to BigMint analysis, iron ore prices in Odisha may remain in uncertain territory till the OMC iron ore auction. However, the market may get clarity on tradable price levels after the auction.
Article Credit: Bigmint
