en.Wedoany.com Reported - On May 14, iron ore prices in Karnataka, India, showed a divergent trend: low-grade fines remained stable week-on-week, while high-grade fines edged higher. Fe 57% fines were priced at Rs 2,450/tonne (approx. $26/tonne) ex-mines, unchanged from the previous week, with cautious buying interest and low spot trading activity, keeping the market range-bound. In contrast, the benchmark Fe 62% fines price rose by Rs 100/tonne (approx. $1/tonne) week-on-week to Rs 4,950/tonne (approx. $52/tonne), primarily supported by tight supply of high-quality, high-grade ore—under the current market conditions, this raw material category has formed a distinct premium segment.
However, the overall market continues to be pressured by weakening downstream fundamentals. Falling finished steel prices, coupled with persistently sluggish demand from the construction sector, have kept pressure on sponge iron prices. While summer construction activity is typically robust, the pace of demand recovery in the region this year has been significantly slower than expected. Furthermore, geopolitical factors in the Middle East have driven up imported coal prices, substantially increasing production costs for sponge iron manufacturers. Industry sources point out that the mismatch between high input costs and low realized prices for finished steel has severely squeezed operational margins, particularly impacting secondary steelmakers. Against this backdrop, procurement activity in the raw material market remains subdued, with buyers being extremely selective in picking up cargoes.
Auction activity was limited this week, but bidding response for high-grade lump ore was notably strong, with buyers having to bid significantly above the reserve price to secure material. Most other grades were transacted at the reserve price, further confirming the market's strong preference for premium ore. Several direct deals were also concluded this week, indicating that despite the overall market weakness, buyers are still willing to accept premium cargoes.
A seller from the Bellary region commented: "Looking ahead, raw material prices are expected to continue strengthening, especially for premium ore, which is still receiving healthy market response despite the weak overall sentiment." Another buyer stated: "Coal prices are steadily rising, but finished steel prices cannot follow suit. Integrated large-scale mills might be able to absorb some of the pressure, but small and medium-sized mills will face significant operational difficulties if the current situation persists."
Regarding pricing rationale, one electronic auction transaction for Fe 57% fines was recorded during this week's publishing window, categorized as a T1 deal with a 50% weighting; additionally, a total of 13 bids and indicative prices were received, of which 10 were considered T2 deals, also with a 50% weighting.
Sponge iron (CDRI) prices in the Bellary region fell by Rs 300/tonne (approx. $3/tonne) week-on-week to Rs 26,700/tonne (approx. $279/tonne). Dragged down by weak demand for finished steel, mill procurement interest was weak, and new orders were cautious. Additionally, logistical bottlenecks further dampened market sentiment, especially for long-distance transportation to western India—vehicle shortages and operational disruptions caused by fuel issues led to shipment delays and increased transport uncertainty. As a result, multiple buyers avoided booking material from Bellary, putting pressure on local CDRI quotes.
In the near-term outlook, iron ore prices in Karnataka are expected to remain range-bound, given weak downstream steel demand and cautious procurement activity from sponge iron producers. However, if sponge iron prices can stabilize or edge slightly higher, it could provide phased support for ore prices.
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