NMDC may Cut Iron Ore Prices in October’15

Less dispatches of iron ore from Chhattisgarh mines and lukewarm responses for NMDC Karnataka’s iron ore may force the company to reduce its prices.

SteelMint anticipates that NMDC, India’s largest iron ore producer, may cut iron ore prices for Oct’15 bookings.

According to market sources, NMDC might cut iron ore prices in the range of INR 100-200/MT for October bookings, looking at the consecutive price cut by Odisha merchant miners and price correction in sponge iron prices.

Other factors that may force the company to reduce its prices for October deliveries are:

1. JSW Steel dropped down iron ore purchases from Chhattisgarh mines
2. Iron ore dispatches to Vizag Steel dropped upto 30%
3. NMDC’s iron ore sales in Karnataka e-auction observed a downtrend
4. Odisha merchant miners corrected prices upto INR 800/MT
5. Sponge iron prices under pressure owing to weak demand and increased production

Iron ore dispatches from Chhattisgarh mines has witnessed a significant drop. Till 28 Sept’15, the company dispatched only 750,750 MT iron ore this month and it is expected that by the end of this month dispatched quantity may touch upto 808,500 MT. Dispatches of iron ore dropped down by 10-12% M-o-M.

Two major buyers of fines i.e. JSW Steel Dolvi and Vizag Steel had reduced their purchases from NMDC’s C.G. mines in Sept’15. Dispatches dropped down upto 47% and 31% respectively. This could drive the company to reduce fines prices for next month.

NMDC’s iron ore sales from Karnataka e-auction is also hit. The company sells around 10 MnT iron ore annually through auction route. Due to lukewarm responses in the e-auctions, the company is selling iron ore at cheaper prices.

Odisha based merchant miners reduced their offers upto INR 800/MT this month to boost dispatches. This could be another reason for NMDC to reduce its offers for October bookings.

Sponge iron prices had witnessed a fall of around INR 100-600/MT last week. Sponge prices are under pressure due to increased production of sponge and low cost input of iron ore from Odisha based merchant miners.