India: NMDC’s Second Iron Ore Price Hike in a Month’s Time

After today’s hike, Baila lump and DR-CLO prices have crossed more than 3.5 years high.

India’s largest iron ore miner – National Mineral Development Corporation (NMDC) has today announced price hike. The miner has increased Baila fines prices by INR 200/MT, Baila lump by INR 300/MT, ROM by INR 280/MT and DR-CLO by INR 360/MT w.e.f today i.e. 26th Sept 2018.

This is the second time miner has raised iron ore prices within a month. Prior to this on 7th Sept the miner had raised prices by INR 150-370/MT.

Factors responsible for the surge in iron ore prices-

1. NMDC’s DR-CLO fetched a high premium in CG auction – NMDC conducted e-auction for 76,000 MT iron ore from its Chhattisgarh mines on 14 Sept’18. Quantity offered comprised of 24,000 MT calibrated lump ore, 16,000 MT ROM, 16,000 MT iron ore lump and 20,000 MT iron ore fines.

According to market sources report to SteelMint, Indian steel mills actively participated in booking DR-CLO and fetched a premium of around INR 1,020/MT to INR 5,312/MT (basic) against base price which was INR 4,292/MT (basic). Mills had actively booked DR-CLO amid less availability in the market.

2. Strong finished steel prices – Major Indian mills are planning for price hike INR 1,000-1,500/MT in flat steel for the month of October. SAIL has already announced a price hike of INR 500/MT in both Rebar and flat steel last week. Vizag Steel has announced a 3rd price hike in September.

3. Tight supply of imported South African lump – According to market sources report to SteelMint, demand for imported lumps in India has witnessed rising amidst limited supplies. However, tight availability of both Kumba and Assmang lump is a matter of concern. Demand for the South African lump in India is high, but the weather constraints, port congestion along with the railway maintenance shut down have reduced the lump availability. Owing to this, mills were heard to have booked a cargo of Australian lump.

4. Improved iron ore dispatches – The rake movement data compiled with SteelMint shows the increased supply of Iron ore from Chhattisgarh mines. It has dispatched 151 rakes during 1st to 20th Sep’18 as against the same duration in Aug’18 at 109 rakes, increased about 39% M-o-M. CG based units have procured 27 rakes in the mentioned time frame against 11 rakes in the same time period of the previous month.

NMDC (C.G.) iron ore prices-

F.O.R prices in INR/MT w.e.f today
Royalty, DMF, NMET and other taxes extra
Source: SteelMint Research