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NMDC Hikes Iron Ore Prices For The First Time In Eight Months

The hike comes  on the heels of similar actions by Odisha-based iron ore producers.

A dump truck transports iron ore at an open pit mine. Photographer: Vincent Mundy/Bloomberg
A dump truck transports iron ore at an open pit mine. Photographer: Vincent Mundy/Bloomberg

India’s largest iron ore miner increased prices for the first time in eight months on the heels of similar actions by Odisha-based producers.

NMDC Ltd. hiked prices of lumps and fine ore by around Rs 200 a tonne each this month—the highest since September 2019—to 2,800 per tonne and Rs 2,560 per tonne, respectively, the miner said in a filing.

The eight percent price hike comes after Aditya Birla Group-owned Essel Mining and Industries Ltd.—a major iron ore mine in Odisha—increased prices by nearly Rs 450 per tonne in its second price hike in December.

Producers in Odisha have been increasing prices of iron ore—a key raw material for steelmaking—fearing a supply disruption once the Odisha government conducts auctions for 33 mining blocks in 2020. That’s because leases for these mines, which contribute nearly a third of India’s iron ore output, are to expire in March and companies anticipate delays of up to two years over securing clearances from various government departments once the licences are allotted to them.

Higher International Prices

The uptick in domestic iron ore prices has mirrored global trends. Prices at Dalian Commodity Exchange have risen since November 2019. Concerns over supply led to an eight percent rally in December after Vale SA, the world’s largest iron ore producer, lowered its production outlook to 68-73 million tonnes from 70-75 MT for the first quarter of 2020.

Improving macro-economic indicators in China has also aided the rally.

Equirus Capital Pvt. Ltd., which recently initiated coverage on the miner, said in a note that NMDC was “an obvious beneficiary to the disruption in Odisha and lump prices are set to rise sharply in FY21”. The company, the brokerage said, was in a sweet spot in the absence of cost pressures in iron ore prices.