India: Low-grade iron ore prices in Karnataka hold firm w-o-w

• Material quality factor in auction bids
  
  
• Supply tightness persists in region
  
  

BigMint's weekly assessment indicates a firm undertone in Karnataka's iron ore market, with prices largely holding steady amid supply constraints and cautious buying. Low-grade fines (Fe 57%) remained stable at INR 2,700/t ($30/t) ex-mines, while Fe 62% grade fines inched down marginally by INR 50/t ($0.5/t) week-on-week to INR 5,100/t ($56/t). Supportive sentiment from the downstream steel and sponge iron sectors has continued to provide a base to iron ore prices in the region, keeping overall market fundamentals relatively stable.

Despite the marginal correction in high-grade fines, supply tightness in the region continues to lend support to prices. Market participants noted that only a limited number of miners are currently offering high-grade material, leading to restricted availability across Karnataka. This constrained supply has prevented any sharp decline in premium-grade iron ore prices.

The situation has been further intensified as the financial year approaches its end, with many miners nearing the exhaustion of their Environmental Clearance (EC) production limits. As a result, production of higher-grade material has declined, reducing fresh supply in the market and helping maintain overall price stability.

Meanwhile, rising coal prices amid ongoing geopolitical tensions indirectly may impact the steel sector. However, iron ore prices have not witnessed a significant upward movement as buyers continue to remain cautious and selective in their procurement strategies.

Auction activity across the region has also been mixed and somewhat subdued. While a few miners have received reasonable participation in their auctions, several others have struggled to attract strong buyer interest. Market sources indicated that material quality remains a key determinant, with buyers showing reluctance to bid for certain lots even when offered below prevailing market prices.

A Bellary-based miner told BigMint, "The overall firmness in prices is largely linked to global geopolitical tensions. Low-grade prices have not moved much, but high-grade fines are likely to find support due to steady demand. We have scheduled an iron ore auction in the coming days, and it will be interesting to see how buyers respond."

Another miner from Bellary informed, "We have postponed our auction due to internal operational issues. It may take around 10 days before we return to the market with fresh offerings."

Meanwhile, a Bellary-based buyer said, "Iron ore prices may rise in the coming days as this period typically sees peak demand. Geopolitical tensions are also expecting to support raw material prices. However, weak demand for low-grade ore was visible in NMDCs Donimalai auction, where lumps remained unsold."

Rationale

• One (1) trade via e-auction was recorded for Fe 57% in this publishing window and was not taken into consideration. Hence, the T1 trade category was accorded 0% weightage.
  
  
• Fourteen (14) offers and indicative prices were reported, out of which twelve (12) were considered as T2 trades. These were accorded 100% weightage.
  
  

C-DRI prices rise sharply by INR 1,650/t ($18/t) w-o-w in Bellary: Prices of sponge iron (CDRI) in Bellary rose sharply by INR 1,650/t ($18/t) w-o-w to INR 28,000/t ($305/t). The primary driver behind this upward movement is the sharp rise in coal prices, which has significantly pushed up the production cost for sponge iron manufacturers. As coal remains a key raw material in the DRI manufacturing process, any increase in its cost directly impacts the overall pricing structure.

Additionally, limited stock availability at the port level has tightened the supply chain, restricting the inflow of imported raw materials due to high freights linked to geo-political tension in the middle-east.

Karnataka iron ore sales scenario (27 February-05 March 2026)

Outlook

Low-grade iron ore prices in Karnataka are expected to remain largely stable, with a slight upward bias in the coming week. Prices are likely to find support from steady demand from the sponge iron and steel sectors, along with constrained supply as several miners approach the end of their Environmental Clearance (EC) production limits. However, any sharp price movement may remain limited as buyers continue to adopt a cautious and selective procurement approach.