India: NMDC hikes iron ore price up to 7% for Oct’20

India’s state-owned iron ore miner – National Mineral Development Corporation (NMDC) has increased prices by 6-7% for Oct’20, sources reported SteelMint. The prices for Baila lump and fines have been increased by INR 200/t and that of DR CLO by INR 240/t. Domestic iron ore prices in India continue to remain on higher side on limited availability in Odisha’s merchant market.

The revised prices for Baila fines (Fe 64%) stands at INR 3,160/t, Baila lump (Fe 65.5%) is assessed at INR 3,450/t and DR CLO (Fe 67%) at INR 4,010/t. NMDC sets prices on a free-on-road (FoR) basis and does not include royalty and taxes.

Reasons behind hike in prices –

• Global iron ore prices rebounded ahead Chinese holidays – Monthly average global iron ore fines (Fe 62%) increased to $124/t, CFR China in Sept’20 against last month at $122/t, CFR China due to a hike in Chinese steel futures and restocking ahead Golden week holidays.
• Supply tightness in Odisha – The persistent supply imbalance in Odisha continues as 14 out of the 19 newly auctioned are yet to resume production. However, it is expected that in Q3 FY’21, some more auctioned mines may start production which may lead to increase in production. Odisha recorded production of 6.05 mn t in Aug’20, down 7%, as against 6.53 mn t in July’20, according to the provisional data of the Odisha Govt.
• Recent OMC’s lump auction received good response- Orissa Mining Corporation’s auction for 668,000 t iron ore lump held on 1st Oct’20, as reported by SteelMint, received bids higher upto INR 1,850/t over the set base price.
• Production concerns in NMDC’s Chhattisgarh mines – NMDC is believed to be facing certain supply issues at its five mines in Chhattisgarh. Company sources told SteelMint that adverse weather conditions coupled with rising coronavirus cases has taken a toll on mining volumes. Recently they had canceled auction scheduled for 29th Sept.
• Hike in domestic steel prices – Indian steel mills have announced a steep hike in list prices of HRC and CRC prices for Oct deliveries. Prices have increased by INR 1,000-2,500/t. The price hike in CRC is higher compared to HRC. Tight supply & robust demand from the auto sector compelled mills to raise domestic prices.