E-auctions conducted by Orissa Mining Corporation (OMC) for sales of iron ore lumps and fines have evoked a poor response with substantial unsold volumes, a government official in India’s eastern state of Orissa said on Monday, July 13.
OMC, a mining company owned and managed by the government of Orissa, put up 314,000 mt of iron ore, including 250,000 mt of lumps and 64,000 mt of fines, for sale through the e-auction route during last week, but almost 14 percent of lumps and the entire volume of fines have remained unsold, the official said.
Several traders told SteelOrbis that the domestic pricing mechanism coupled with the virtual crash in international prices of the raw material were the main reasons for the lack of interest in the latest e-auction and for stocks remaining unsold.
The traders said that even the reserve price set for the e-auction by OMC was considered too high by actual users. Many of the steel mills without captive iron ore mines and prospective bidders at the auction stayed away on the perception that imported iron ore in current depressed market conditions will be more viable, the traders said.
OMC determined the reserve price for its e-auctions on the basis on the iron ore price announced by the Indian Bureau of Mines (IBM) for the previous month, the commercial sales price of miners in the previous month, and the weighted average of steel products.