India: NMDC cuts iron ore prices by around 20-25% for early June deliveries

The state-owned and India’s largest merchant iron ore mining company has slashed prices of lump ore by upto INR 1,320/t and fines INR 1,100/t, effective from 5th June, SteelMint learnt from credible sources. This is about 20-25% from the last price announcement which was made on 25 May’22.

This is the second cut by the miner, post Indian government imposed an export duty of 50% on iron ore and 45% on iron pellets.

NMDC fixed prices for lump iron ore (65.5%, 6-40mm) at INR 4,400/t, DR CLO (Fe 67%, 10-40mm) at INR 5,280/t and iron fines (64% – 10mm) at INR 3,310/t with effect from 5th June 2022.

Reasons behind the price cut:

• NMDC’s iron ore sales fall in May: India’s top iron ore miner NMDC’s production stood at 3.20 mnt in May 2022, up 2% m-o-m from 3.15 mnt in April 2022. However, iron ore sales decreased by 15% m-o-m to 2.65 mnt in May.
• Drop in Odisha iron ore prices: SteelMint’s weekly Odisha iron ore fines index (Fe 62%) fell further by INR 2,000/t m-o-m to INR 3,600/t ex-mines. Post-export duty hike, many buyers are reluctant to buy material under the current uncertain market conditions and lower plant capacity utilization. The Indian government announced steep tariffs on eight steel items as well as iron ore and pellets late on 21 May 2022, which led to a decline in domestic prices of steel and steelmaking raw materials, SteelMint understands.
• Mills slash steel prices sharply for early-June deliveries: Steel prices announced by the primary steel producers for June sales dropped sharply from their early May levels. Declining prices in the overseas markets and subdued demand in both the domestic and global markets weighed on sentiments, in turn, pulling prices lower. SteelMint’s benchmark price assessment for HRCs in the trade segment stood at INR 63,500-64,500/t ($820-833/t), down steeply by 2,300/t ($30/t) w-o-w, while CRC prices fell by INR 2,800/t ($36/t) to INR 72,500-73,500/t ($936-949/t). Prices are basic, excluding GST at 18% on exy-Mumbai basis.

NMDC is India’s largest iron ore producer, produced about 42 million tonnes of iron ore in FY’22 from mines located in Chhattisgarh and Karnataka.