Iron ore price fall takes a massive toll in Goa e-auction

Falling iron ore prices took a big toll on the fifth round of the state government’s e-auction in Goa. Two-thirds of the allocated quantity remained unsold, as the base price was fixed higher than that in global markets. By contrast, earlier auctions saw good participation from local steel mills, sponge iron units and mineral exporters. The fifth e-auction was earlier this month and 2.3 million tonnes was offered for sale. About 699,000 tonnes was sold. Relatively poor quality of ore was another factor for the lack of buyer interest. There were no domestic taker for these grades. Besides, exports of these grades are unviable due to the 30 per cent export duty, in addition to other state levies recently imposed. Iron ore prices are down 40 per cent since January to a current $80 a tonne, due to falling demand from steel mills. Import was cheaper than buying from Goa. Of the total sales, ore-deficient JSW Steel bought 345,000 tonnes. Other major buyers were Royalline Resources, Sesa Sterlite and Bagadiya Brothers. Grade and logistics cost are the two determining factors for participation. For certain low grades, transportation cost becomes higher than the cost of mineral itself. Falling iron ore prices in the international market was another reason for selective interest in participation. Weak buying sentiment, however, may affect iron ore e-auction in future.