India: Will NMDC increase iron ore prices for January supply?

NMDC, under current circumstances, is expected to raise its prices in its monthly revision for January 2023 as per SteelMint’s analysis.

The PSU miner had last raised iron ore prices by up to INR 360/tonne (t) on 30 November. The company raised prices of lump ore by up to INR 300-360/t and fines by INR 300/t, on 30 November.

SteelMint started a new feature of predictive analysis a few months ago, where correlation between certain “predictors”/parameters/market or price influencers suggests an indication of future price movements of a particular commodity.

SteelMint has studied NMDC’s price data for the last five years to identify 11 parameters/ influencers which, it feels, are highly correlated, directly or indirectly, with its iron ore price movements.

The predictive price estimation is based on data metrics and co-relations that impact the company’s pricing decision such as domestic and global iron ore prices, prices of metallics as well as domestic semi-finished and finished steel.

In the current study, out of 11 parameters, 3 are reflecting a downtrend at present, 7 are showing positive and one remains unchanged. It can be assumed that NMDC is most likely to hike iron ore prices for January dispatches.

Reasons for potential price rise

• Odisha iron ore prices up m-o-m: SteelMint’s weekly Odisha iron ore fines (Fe 62%) index has improved by around INR 1,000/t m-o-m to INR 4,500/tonne (t) ex-mines (including royalty, DMF and NMET). The majority of Odisha-based merchant miners’ iron ore offers increased and they may announce new hike in offers in the first week of January 2023.
• Pellet exports improve after duty removal: India’s pellet export trade improved last week. SteelMint’s India pellets (Fe 63%, 3% Al) export index, FOB east coast, was recorded at $109/t, up by $1/t w-o-w. The index seems to be improving, with a couple of deals reported following the removal of export duties, but buying interest has recently narrowed on account of rising Covid cases in China.  An Odisha-based pellets producer has concluded an export deal for 55,000 t of pellets (Fe 63%, 3% Al), which was heard concluded at $122-123/t CFR China for January 2023 shipment, sources confirmed.
• Domestic pellet offers rise sharply m-o-m: SteelMint’s bi-weekly domestic pellets (Fe 63%) index, PELLEX, stood at INR 9,650/tonne (t) DAP Raipur, moving up by INR 1,200/t m-o-m. Buyers have now started showing interest in pellets buying.
• Indian steel mills to lift offers for January sales: Trade prices of hot-rolled coils (HRCs) have been on a rise for the second consecutive week. The current week’s price assessment shows an increase of INR 800/t ($10) in the Mumbai market. Mills are eyeing a hike in prices for January 2023 sales, which has kept trade segment prices buoyant. Furthermore, Jindal Steel & Power Ltd (JSPL) has announced an increase of INR 1,000/t in list prices of rebar yesterday for January 2023 sales.
• Global iron ore prices firm up: Benchmark Fe 62% fines prices moved up by $14/t m-o-m to $117.35/t CFR China on 30 December. Iron ore prices were likely to rise in the short-term as construction demand in China may increase around March 2023, promoting the usage of greater Fe content medium-grade fines.