NMDC Ltd. has announced a significant reduction in its iron ore prices, effective July 1, 2025, signalling potential headwinds for the upcoming financial quarters.
Prices have been cut by over 9% month-on-month, reflecting a broader softening in the iron ore market.
The price of Baila Lump ore has been trimmed by 9.5% to Rs 5,700 per tonne from Rs 6,300/tonne in June. Similarly, Baila Fines saw a notable 9.3% reduction, now priced at Rs 4,850 per tonne, down from Rs 5,350/tonne.
For context, the average price for Baila Lump in FY25 stood at Rs 6,094/ton, while Baila Fines averaged Rs 4,611/ton.
This marks a consistent downward trend, with iron ore prices collectively falling by approximately 11% over the last two months.
This price reduction is expected to have a direct negative impact on NMDC's revenue and profitability and can cause a significant dent on the company's revenue per tonne, with the effects likely to be visible in the first and second quarters of fiscal 2026.
Brokerages' View
JPMorgan maintained an 'underweight' rating on NMDC, as it expects increased pressure on iron ore prices from 2027 onwards. A key factor in this outlook is the anticipated ramping up of production at the Simandou Project in Guinea.
The massive Simandou project, once fully operational, is poised to significantly increase global iron ore supply. This increased production and exports could potentially lead to an oversupply in the international market, putting further downward pressure on prices and impacting major players like NMDC.
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