India: Odisha iron ore fines index drops by INR 50/t ($0.5/t) w-o-w with fresh offers in market

• Around 1 mnt trading activity in the region with bulk deals
  
  
• OMC restricts traders from participating in the monthly e-auction
  
  

Iron ore prices in the Odisha region remained under pressure in the week ended 11 April, despite high trading activity, as fresh offer announcements by Odisha-based miners weighed on market sentiment. The availability of material in the spot market increased, prompting several miners to lower prices and conclude bulk deals for April delivery.

Price update

BigMint's Odisha iron ore fines (Fe 62%) index decreased by INR 50/t w-o-w at INR 5,750/t ($62/t) ex-mines on Saturday (11 April). It recorded deals for around 994,000 t this week, concluded directly by steelmakers with private miners and traders.

A few deals were concluded in the iron ore auction via SAIL, JSW, and OMDC this week. Around 154,000 t of iron ore was sold in auctions by these miners this week.

Market highlights

Market participants indicated that buying interest was present but cautious. According to market source, "Steelmakers are currently in a wait-and-watch mode, as they are expecting better clarity from the upcoming OMC auction. Bulk procurement decisions are largely being deferred until then." This cautious stance has limited aggressive buying in the spot market despite improved supply.

A key development influencing market dynamics is the decision by Odisha Mining Corporation (OMC) to restrict trader participation in its monthly auctions. Market sources noted that this move could have a softening impact on prices. A steelmaker informed, "As traders are sidelined, competition in auctions may reduce, which could slightly ease prices compared to previous auction levels."

However, another section of the market downplayed the impact of this restriction. A steel producer said, "Traders typically secure limited volumes in OMC auctions, as major integrated steel producers directly participate for their raw material requirements. Hence, the overall demand structure may not see a significant shift."

On the supply side, miners have shown increased willingness to offload bulk volumes. This comes after the resumption of production under the newly granted Environmental Clearance (EC) limits. A miner mentioned, "We are actively taking bulk orders now as production levels have improved post-fresh EC approvals."

Despite the current pressure, some supportive factors remain. A recent hike in iron ore prices by central India-based miners NMDC and Lloyds Metals, coupled with firm trends in semi-finished steel and downstream products, may provide a floor to prices. Ongoing geopolitical tensions are also contributing to cautious optimism in the broader commodities market.

Factors affecting iron ore prices

Pellet prices show mixed trend: Pellet (6-20 mm, Fe 62.5%) prices in Odisha's Barbil inched up by INR 50/t w-o-w to INR 9,200/t ($99/t) loaded to wagon on 10 April. Pellet (Fe 62.5%, 6-20 mm) prices in Durgapur fell by INR 100/t to INR 10,200/t ($110/t) exw.

Sponge iron prices stable w-o-w: According to BigMint's assessment, sponge iron C-DRI (FeM 80%) prices in Rourkela remained stable w-o-w at INR 29,000/t ($312/t) on 11 April.

Billet prices up w-o-w: Meanwhile, steel billet (100*100 mm) prices in Rourkela rose by INR 150/t ($1.5/t) w-o-w to INR 41,850/t ($450/t) on 11 April.

Rationale

• T1- Three (3) deals for Fe 62% fines were recorded in the publishing window, and two (2) was considered for price computation. These were given 50% weightage for index calculation.
  
  
• T2 - BigMint received twenty (20) offers and indicative prices under the T2 category (offers, indicative, and bids) in this publishing window. Sixteen (16) were taken into consideration and given 50% weightage. To check BigMint's iron ore assessment, pricing methodology, and specification document, click here.
  
  

Outlook

According to BigMint analysis, the Odisha market expects clearer price direction post the upcoming OMC auction, which will set the tone for near-term pricing and reveal the actual impact of trader participation restrictions on market dynamics.