India: NMDC cuts iron ore prices by INR 500/t ($6) for July'24 deliveries. Know why?

India's largest merchant iron ore mining company, NMDC, decreased list prices of iron ore CLO (calibrated lump ore) and fines today by INR 500/t($6/t), BigMint learnt from sources. The company's prices are effective from 30 June 2024.

The miner has fixed prices of DR CLO (10-40mm, Fe67%) at INR 7,020/t ($84/t) and of iron ore fines (-10mm, Fe64%) at INR 5,110/t ($61/t) on FOR basis from its Bacheli complex. Prices include royalty, DMF and NMET charges.

Factors behind price cut:

Bids drop around INR 1,000/t ($12) m-o-m in OMC's iron ore auction - In Odisha Mining Corporation's (OMC's) auction for 2.917 mnt of iron ore fines (Fe 54-65%) conducted on 20 June, around 1.68 mnt (94% of the offered quantity) fines were booked while around 1.114 mnt (99% of the offered quantity) of lumps fetched bids. Bids decreased by around INR 1,000/t ($12/t) and INR 1,100/t ($13/t) (weighted average) for the majority of fines and lumps lots against last month respectively. Notably, the company had reduced base prices m-o-m by up to INR 250-300/t ($3-4/t) and INR 1,150-1,350/t ($14-16/t) for both fines and lumps, respectively.

Domestic pellet prices fall to over 2-month low - BigMint's bi-weekly domestic pellet (Fe63%) index dropped to INR 9,600/t ($115/t) DAP Raipur on 28 June. The index hit a two-and-a-half month low as similar levels were last seen in mid-April, as per data maintained with BigMint. Pellet prices dropped in Raipur as local plants decreased their offers and landed offers from eastern India, too, fell post-OMC auction amid weak demand. In addition, pellet export bookings from India have also slowed down this month amidst lower export realisation on falling global prices.

Global iron ore prices fall on rising Chinese port inventories - China's imported iron ore prices have fallen to a two-month low in June. The drop was driven by crude steel production cuts amid lukewarm steel demand, squeezed margins and decarbonisation drive. A decline of 1.4% was seen in crude steel production over January-May, 2024 while June data is awaited. Fe62% iron ore fines, CFR China, dropped a steep 9% or $11/t m-o-m to $107/t ($118/t). Steel mills are primarily purchasing iron ore on need-basis and mills are not keen to stock up. Thus, iron ore inventories at China's major ports increased to 146.95 million tonnes (mnt) on 20 June compared to the previous week. Inventories had been assessed at 144.65 mnt on 23 May.

India's steel index falls to 11-week low - The BigMint India Steel Composite Index dropped further to close at an 11-week low. There is a slowdown in construction with the advent of the rainy season. Buyers have moved to the sidelines in anticipation of further price falls. On the other hand, cheaper imports have weighed on domestic flat steel prices .