NMDC Hikes Iron Ore Prices For First Time In Five Months
State-run National Mineral Development Corporation Ltd. hiked the prices of iron ore for the first time in five months in the middle of February in line with global trends.
The miner hiked the prices of lump and fine iron ore by as much as 15 percent and 17 percent, respectively, according to its director, TRK Rao. The price hike is the highest since September last year for lump ore and January 2018 for fine ore, according to its exchange filings.
Ore prices rallied by around 20 percent this year due to a supply shortage caused by lower output at Vale SA—the ore’s largest producer—following a dam burst at its mine in Feijao, Brazil, which killed at least 169 people.
Global iron ore prices surged further after Vale flagged a potential annual loss of an additional 30 million tonnes (which it had earlier pegged at 40 million tonnes) and declared force majeure on some contracts, according to Bloomberg.
This comes after miners in Odisha miners hiked ore prices by Rs 250-300 per tonne earlier this month and with a current discount of 15 percent to international prices, hikes are here to stay, according to Amit Dixit, assistant vice president at Edelweiss Financial Services.
However, concerns related to oversupply in the long term persist.
“The multi quarter-high discount of 14 percent of NMDC to landed cost of iron ore is expected to narrow down in coming months providing a strong tailwind,” Bank of America Merill Lynch said in a note. “However, long-term pricing power of the company is expected to be challenged by oversupply in the domestic market.”