It is expected that NMDC under current circumstances may keep iron ore prices unchanged in its monthly revision.
On 12 July, the miner slashed prices of lump ore by up to INR 600/t and fines by INR 500/t, SteelMint learnt from credible sources. This is about 11-15% from the last price announcement made in June.
New assessment launched
SteelMint has recently started a new feature of predictive analysis, where correlation between certain “predictors”/parameters/market or price influencers give an indication of future price movements of a particular commodity.
SteelMint has studied NMDC’s price data for the last five years to identify 21 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 12 parameters, 6 are reflecting a downtrend at present, and others are showing positive. It can be assumed that NMDC is most likely to keep iron ore prices unchanged for August dispatches.
Reasons for potential price freeze
- Odisha iron ore prices rise: SteelMint’s weekly Odisha iron ore fines index Fe 62% moved up marginally w-o-w at INR 3,550/t ex-mines while the Fe 63% lumps (Odisha) index remained stable at INR 7,000/t ex-mines, as assessed on 23 July. However, on m-o-m basis, the indexes have risen by INR 400/t and INR 800/t.
- Impact of monsoons: During monsoons iron ore production volumes remain tight. India’s iron ore production inched down to 21.88 mnt in May from 22.8 mnt in April.
- Bids remain stable in OMC auction: Odisha Mining Corporation’s (OMC) iron ore fines auction was held for 1.62 mnt out of which only 635,000 t (39%) received bids. The miner decreased the base price for fines marginally by up to INR 150/t for the auction and bid prices remained close to the set base price except for the Jilling lot.
- Sponge price hike supports pellet offers: Godawari Power and Ispat Ltd (GPIL) has increased domestic pellet offers by INR 300/t to INR 9,100/t exw from INR 8,800/t seen till 27 July. The hike in sponge iron prices led to the rise in pellet offers, SteelMint notes. Pellet-based DRI (P-DRI, FeM 80%) prices in Raipur rose by INR 2,000/t m-o-m to INR 35,100/t exw.
- Recovery in global iron ore prices: The spot price of iron ore in China rose sharply on 29 July on bullish steel data and positive macroeconomic indicators. Benchmark Fe 62% fines prices rose by $6.9/t to $117.95/t CFR China. News of production restarts earlier in the week is keeping the iron ore market supported.
To know more about, Indian iron ore market outlook
Iron ore and pellets conference: SteelMint Events will be hosting the 5th Indian Iron Ore & Pellet Summit on 3-4 August, 2022 at The Lalit, New Delhi. The conference will discuss key issues being faced by the iron ore and pellets industry in India. The focus will be on market dynamics, policy-related changes, growth challenges and enablers, sustainability and decarbonisation goals, the way forward and many more talk points.
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