It is expected that NMDC, under current circumstances, may correct downward its iron ore prices further in its monthly revision which is due anytime. It may be noted, NMDC, India’s largest merchant iron ore mining company, has already reduced prices twice in the last one month.
In the second price cut on 5 June, 2022, it slashed prices of lump ore by up to INR 1,320/t and fines by INR 1,100/t.
Recently, SteelMint, introducing a hypothetical analysis based on certain sets of correlations between “predictors”/parameters/market or price influencers, gave indication of future price movements of a particular commodity. SteelMint has studied NMDC’s historical price analysis and identified 21 parameters/ influencers which, it feels, are highly correlated, directly or indirectly, with its iron ore price movements.
In the current study, out of the top 7 parameters, 6 are still reflecting a downtrend, and it can be assumed that NMDC is most likely to reduce iron ore prices further for July dispatches.
However, in the total 12 price indicators, 11 are showing fall in prices for the month of July. It has been also predicted that NMDC’s monthly rake dispatches are expected to fall by 24% for June.
Factors impacting iron ore prices
- Odisha iron ore fines index sinks to nearly 2-year low: SteelMint’s weekly Odisha iron ore fines index (Fe 62%) fell by INR 2,400/t m-o-m to INR 3,150/t ex-mines. Post-export duty hike, many buyers are not showing much interest in buying material. In fact, iron ore fines prices in Odisha have touched their nadir since SteelMint started the index in November 2020. Odisha Mining Corporation (OMC) had scheduled an iron ore fines auction today in which out of a total of 1.55 mnt of material only 89,000 t (less than 6%) received bids.
- Pellet prices fall sharply in absence of active exports: Post-the export duty imposed on pellets, makers in Raipur reduced prices sharply on weak demand and falling sponge prices. SteelMint’s bi-weekly domestic pellet (Fe 63%) index, PELLEX, stood at INR 7,450/tonne (t) DAP Raipur, down by around INR 1,400/t m-o-m. Pellet exports have almost dried up and limited deals have been heard post- tax.
- NMDC iron ore auction from Chhattisgarh finds no takers: NMDC conducted two iron ore auctions on 21 June from Chhattisgarh. The first auction was for 109,200 t of Fe 64%-67% (indicative) grade material from its Bacheli mines and the second one was for 67,200 t of Fe 64-65.5% (indicative) grade ore from the Kirandul mines. According to sources, the auction failed to fetch any response.
- Global iron ore prices down in sluggish market: The spot price of iron ore in China fell sharply as demand from Chinese mills is down. Benchmark Fe62% fines prices moved down by $24/t m-o-m to $109.40/t CFR China today. Furthermore, due to low steel margins, Chinese mills were heard putting their blast furnaces under maintenance shutdown.
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