Sluggish steel demand in the country, a reduction in prices by Indian mills and an increase in stocks – following steep export duty imposition – saw iron ore prices tumble across auctions in Odisha by nearly 20 per cent, while NMDC, the country’s largest miner, reduced prices by nearly 25 per cent in a two-week-odd period.

The fall in domestic prices happened even as global iron ore prices rose by nearly 6 per cent to $143 per tonne on strong global cues, especially Shanghai’s opening up after a withdrawal of stringent Covid-induced restrictions.

Sluggish steel demand

According to an official of a steel major, June sales in India are already down from their early May levels. The fall in steel prices in overseas markets and subdued demand in domestic markets weighed on sentiments.

Trade sources say hot rolled coil prices are down to ₹63,000–₹65,000 per tonne, nearly by ₹2,500 per tonne week-on-week and by around ₹5,000 per tonne, month-on-month.

The cold rolled coil prices are down by ₹3,000 per tone w-o-w and ₹5,000–₹6,000 per tonne m-o-m to ₹72,500–₹74,000 per tonne.

A steel maker said, requesting anonymity, that many buyers are reluctant to buy materials under the current uncertain market conditions and lower plant capacity utilisation. “

India announced steep tariffs on eight steel items, iron ore, and pellets on May 21, which led to a decline in domestic prices of steel and steel-making raw materials, including iron ore.

Auction prices

According to trade sources, domestic iron ore fines offers for the Fe 62 per cent grade fell to ₹3,700-₹3800 per tonne, down by 19 -21 per cent from May 23 price of ₹4,700 per tonne.

At the Odisha auctions, iron ore of Fe 63 per cent grade was being traded at ₹4,100–₹4,200 per tonne, down 18–19 per cent from the ₹5,100 per tonne it fetched two weeks back.

Effective June 5, NMDC Ltd. announced a price cut in lump ore by ₹1,300 per tonne (odd) and in fines by over ₹1,000 per tonne. It is the first price cut in June, and the steepest in recent times (between 20 and 25 per cent over May 25 prices). The price for lump iron ore (65.5%) is at ₹4,400 per tonne, while for iron fines (64% Fe) is at ₹3,310 per tonne.

Poor buyer response

Sources say NMDC’s production for May was over its April numbers of 3.15 million tonnes, but it reported a decrease in sales for the month of around 2.60–2.70 million tonnes.

The auction of iron ore by a steel major from its mines in Odisha has failed to generate appropriate buyer interest too, with mills deferring purchase decisions anticipating a further drop in prices.

SteelMint’s weekly Odisha iron ore fines index (Fe 62%) fell by ₹2,000 per tonne m-o-m to ₹3,600 per tonne ex-mines.

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