India: NMDC announces second iron ore price hike for Dec’20

India’s largest merchant and govt-owned iron ore miner, NMDC has announced the 2nd price hike for Dec’20, SteelMint learned from credible sources. The price of Baila lump has increased by INR 700/t ($10), DR-CLO by INR 820/t ($11) and that of fines by INR 500/t ($7). The sharp hike in global iron ore prices and consecutive Indian steel prices have led to a hike in iron ore offers.

The revised prices for Baila fines (Fe 64%) stand at INR 4,610/t, Baila lump (Fe 65.5%) is assessed at INR 5,200/t and DR CLO (Fe 67%) at INR 6,040/t. NMDC sets prices on a free-on-road (FoR) basis and does not include royalty and taxes.

The miner has announced a price hike towards early Dec’20. Prices were increased up to 14% for its Chhattisgarh based mines.

Reasons behind hike in prices –

• Rise in imported lump offers on global price hike – Southern India and western India -based steel mills have recently booked few iron ore lumps vessel from South Africa, sources have reported to SteelMint. SteelMint’s assessment for South African lumps was at around $160-165/t, CNF Kandla, up by around $30 m-o-m.

Chinese spot iron ore fines (Fe 62%) price opened at $147.55/ t last week and increased to $160.7/t towards the weekend. Bullish sentiment for iron ore demand stemmed from strong flat steel prices and winter restocking demand. Also, the prices favored on the expectation of the Australian cyclone affecting loading at Port Hedland. Vale in its recent press release on 2nd Dec ’20 notified that the company has reduced its iron ore production guidance to 300- 305 mn t as against previously set guidance at 310-330 mn t.

• Successive price hikes by Indian steel mills – Indian mills have been raising finished steel prices successively this month on the back of restocking demand and tighter supplies. For instance, AM/NS India has announced another round of hike in HRC and CRC list prices by INR 1,000/t ($14/t) effective from today. The revised list prices stand around INR 50,150/t for HRC and INR 59,250/t for CRC (exy-Mumbai) excluding GST. This is the company’s 3rd price hike for Dec’20, sources have reported SteelMint. Other mills like JSW, SAIL and Tata have already raised HRC prices twice so far in Dec’20. 1st price hike of around INR 2,000/t was made in early Dec’ 20 followed by 2nd hike made by INR 1,500-2,000/t last week.
• Hike in imported scrap offers on availability concerns – Following the global price uptrend, Indian imported scrap offers were seen at $415-420/t CFR Nhava Sheva towards the closing of last week. Tighter availability from the US and container shortage have lifted global scrap prices. SteelMint’s assessment for imported scrap in India has rallied by $65 m-o-m.