NMDC Hikes Prices For Fourth Time Since April On Strong Demand

NMDC Ltd., India's largest iron ore miner, hiked prices for the fourth time since April on rising steel demand in India and a widening difference between domestic and international rates.

The state-run company increased prices of lumps by Rs 200 to Rs 3,550 a tonne and that of fines by Rs 140 to Rs 3,100 a tonne in September, according to its exchange filing. The miner had hiked rates by 5 percent in August as prices of iron ore pellets, according to Edelweiss, jumped to their highest in more than three years last month.

The recent hike comes on the back of an increase in prices by private miners in Odisha and costlier pellet and sponge iron, TK Rao, chairman and managing director of NMDC, said. The sponge and pellet prices rose 6 percent and 25 percent on a monthly basis to Rs 26,500 a tonne and Rs 9,300 a tonne, respectively, in September, he said.

The hike, Rao said, is also in the wake of a widening gap between domestic and international iron ore prices, which trade at a premium of $27 a tonne. That compares with a $12 per tonne premium over local prices in the last four-five months, he said.

Production And Sales

The miner's production and sale of iron ore declined more than 25 percent year-on-year in the April-August period, according to data compiled by BloombergQuint.

“The volumes remained weak mainly due to issues in Karnataka and heavy rainfall in Chhattisgarh,” Rao said. The company, he said, is expected to report marginally higher sales volume of around 37 million tonnes in the ongoing financial year compared with 36 MT last year as volumes usually catch up in the second half of the fiscal.

Brokerage Narnolia Securities, however, said NMDC's volume growth is expected to remain muted in the financial year through March 2019 due to increase in supply from other miners in Odisha, auction of iron ore mines for captive consumption and commissioning of captive mines by steelmakers like JSW Steel Ltd.