India: Bids in OMC iron ore fines e-auction drop by upto INR 1,900/t ($25) against May

State-owned miner Odisha Mining Corporation (OMC) had scheduled an iron ore fines e-auction yesterday, 8 Jul’21. The material was offered from its Gandhamardan, Daitari, Koira, Jilling, Tiring Pahar and Guali mines. The entire quantity of 1.06 million tonnes (mn t) put to auction got booked. The bids dropped by INR 1,100-1,950/tonne (t) compared to the May'21 auctionbids.

Surprisingly, the bids fell sharply against the prevailing market prices of the private merchant miners in Odisha. SteelMint's weekly iron ore fines Fe 63% index on 3 Jul’21 stood at around INR 10,200/t, up by INR 800/t m-o-m.

“Participation was not that aggressive. The market expects a fall in domestic iron ore prices from private miners as well,” informed sources.

Key buyers: Some of the key buyers in the auction included JSPL, which booked about 100,000 t of fines and ESL Steel Limited, with 29,000 t. Others were Tata Steel BSL Limited with 99,000 t and Orissa Metaliks Pvt Ltd, at 118,000 t.

OMC iron ore auction summary

Base prices in INR/t on ex-mines basis; including royalty
Qty in t
Source: SteelMint Research

Why did the auction fetch lower bids?
 

• Less aggressive participation: The iron ore fines auction held on 08 Jul’21 received lower bids as compared to the last e-auction held in May'21 due to dull participation. Few major buyers in the last e-auction, like Brahmani Rivers Pellets Limited and Atibir Industries, did not participate in this auction, SteelMint notes.
  
  
• Drop in pellets, sponge prices: Pellet offers in Barbil dropped to INR 14,500/t loaded to wagons this week, down by INR 700/t m-o-m. Also, pellet sponge P-DRI prices in Durgapur saw a decline by around INR 2,500/t m-o-m to INR 28,000/t yesterday.
  
  

OMC emerged as the largest iron ore merchant miner in Odisha in FY’21 with 13.30 mn t of production against 12.38 mn t in the previous fiscal (FY'20), a growth of 7% y-o-y. OMC has applied to the Union Ministry of Environment, Forests and Climate Change (MoEFCC) for expanding the annual production capacity of its Guali iron ore mine in Odisha to 30 mn t per annum.

Notably, the rates for domestic sale of iron ore at OMC are decided on e-auction basis. About 30% of the total mineral extracted is earmarked for national e-auction and the remaining 70% is for long-term linkages.