Iron ore prices are likely to remain under pressure in the month of Jul’16 amid rising production and comparatively lesser dispatches.
As per trade sources, big Odisha merchant miners are giving rebate in prices by INR 100-200/MT but its official announcement is yet to come. Participants expect Odisha miners in Jul’16 will make the rebate officially and will not reduce prices further.
Raipur based sponge iron & pellet makers are hopeful for price cut by NMDC amid falling sponge prices and shift in sourcing pattern of JSW Steel. C-DRI (DR-CLO) prices in Raipur are down by INR 300/MT M-o-M and are currently assessed at INR 12,750/MT (ex-works) and P-DRI prices in Raipur are currently heard at INR 10,650-10,750/MT (ex-works).
Factors governing domestic iron ore prices for Jul’16 –
1. Domestic sponge iron price scenario – Eastern India sponge iron prices remained range bound in Jun’16 with minor corrections. Sponge iron prices in Durgapur fell by INR 100/MT M-o-M and in Odisha they fell by INR 50-100/MT. In central India prices fell by upto INR 350/MT. On the other side, sponge iron prices in southern India have moved up recently by upto INR 550/MT M-o-M over temporary closure of few plants.
2. JSW Steel’s sourcing from NMDC (C.G.) remains nil in Jun’16 – A prominent buyer of iron ore from NMDC (Chhattisgarh) – JSW Steel, Dolvi has not sourced a single rake of iron ore from NMDC in Jun’16*. Last month it had sourced 32 rakes from NMDC’s Chhattisgarh mines. The steel maker has shifted its buying interest to Odisha iron ore over cheaper availability of ore. It increased its procurement from Odisha from 62 rakes in May’16 to 79 rakes in Jun’16*.
3. RINL’s sourcing from NMDC (C.G.) – Iron ore sourcing of Vizag Steel (RINL) has remained stable on monthly premises. In Jun’16* it has sourced 126 rakes against 124 rakes in May’16.
4. Chhattisgarh based units sourcing from NMDC stable in Jun’16 – Chhattisgarh based sponge units have procured 56 rakes in Jun’16*. The figure is stable against that of May’16. Last month state based units had procured 62 rakes from NMDC Chhattisgarh mines.
5. Sourcing of C.G. based units from Odisha fall in Jun’16 – Chhattisgarh based plants had procured 298 rakes of iron ore from Odisha in May’16. In Jun’16*, they sourced 203 rakes.
6. Global iron ore prices down by USD 4/MT M-o-M – Monthly average prices of fines (Fe 62%) was recorded at USD 51/MT, CFR China in Jun’16 against USD 55/MT, CFR China. No vessel of lump import to India was observed in Jun’16 as steel makers preferred domestic material. Gujarat based lump importers were also seen going for domestic pellets of Jindal SAW.
* data updated till 26 Jun’16