India's largest iron ore miner slashed prices of the raw material for steel-making to the lowest in four months amid weak demand.
NMDC Ltd. lowered prices of lumps and fines by 16 percent and 17 percent month-on-month, respectively, to Rs 2,650 and Rs 2,360 a tonne for April, according to an exchange filing. That's the lowest since January.
This comes at a time the new coronavirus pandemic is likely to deepen a slump in India's steel demand as the nationwide lockdown to combat spreading of infection delays new construction and purchases of cars and houses.
The reduction is in line with current market conditions in India where steel production has reduced substantially amid lockdown, according to Vishal Chandok, research analyst at Emkay Global. “We expect weakness in demand will likely keep steel production low through the FY21 and hence demand for ore,” he said. “However, we believe ore prices can rebound in a few months if mines in Australia and Brazil face production issues due to lockdowns /Covid-19 cases within mining community, and China continuing with stable production leading to severe ore shortage.”
Amit Dixit, AVP (research) at Edelweiss Securities, said so far, only lump prices were cut by Odisha-based players but with this even fines prices will be reduced drastically and overall this will be beneficial for JSW Steel Ltd. and other non-integrated steelmakers—that source raw materials. Weak demand in the country, according to him, mainly has led to the price cut.
NMDC has yet to respond to BloombergQuint's emailed queries and messages.
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