India: NMDC cuts iron ore prices by up to INR 750/t ($10)

India’s largest iron ore miner – NMDC has cut prices by up to INR 750/t, sources confirmed SteelMint. Fines prices have come down by INR 750/t and that of DR-CLO by INR 720/t. Prices have fallen to around four-month low. The revised prices are as follows:

• Baila lump (6-40mm, Fe 65.5%) – INR 5,500/t
• DR CLO (10-40mm, Fe 67%) – INR 6,600/t
• Baila fines (Fe 64%) – INR 4,410/t
• Prices are on FOR basis, excluding royalty and taxes.

Reasons behind price cut –

• Odisha iron ore fines index falls to four-months low – SteelMint’s weekly Odisha iron ore fines index (Fe 62%) fell sharply by INR 750/t w-o-w to INR 4,800/t ex-mines as on 21 May’22. Iron ore fines (Fe 62%) index has fallen to four-month low as this level was last seen in early Jan’22.
• Govt’s decision to increase export tax on iron ore & pellets – The Indian government announced steep tariffs on eight steel items as well as iron ore and pellets late on 21 May’22, which is likely to lead to a decline in domestic prices of steel and steelmaking raw materials, SteelMint understands. The immediate impact will be a decline in domestic prices of iron ore and pellets as exports have been rendered unviable and domestic supply will increase.
• Steel prices correct after export tax announcement  – SteelMint’s daily steel billet index was assessed at INR 46,400/tonne (t) exw-Raipur on 24 May 2022, falling by INR 4,200/t in the last two days.
• NMDC iron ore auction from Chhattisgarh finds no takers – NMDC conducted two iron ore auctions on 24 May’22 from Chhattisgarh. The first auction was for 126,000 t of Fe 64%-67% (indicative) grade material from its Bacheli mines, while the second was for 67,200 t of Fe 64-65.5% (indicative) grade ore from the Kirandul mines.
• Iron ore supplies pick up – Moreover, the domestic iron ore supply scenario has changed over the past year and a half. Supply has returned to the market after companies that won mine blocks in the Odisha mineral block auctions in 2020 have raised output from the auctioned blocks. State-owned mineral producers too have raised production levels after bagging new mines, operationalising existing mines and renewing licenses for operation. Higher supplies have gone some way in stabilising domestic ore prices. India’s iron ore production rose by over 20% y-o-y to a record high of more than 250 mnt in FY’22 compared with the previous fiscal.