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India: NMDC hikes iron ore prices up to INR 400/t ($5) for Oct deliveries. Know why?

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Fines/Lumps

BigMint Bureau

1154 Reads

1 Oct 2024, 08:15 IST

India: NMDC hikes iron ore prices up to INR 400/t ($5) for Oct deliveries. Know why?

Bids rise in OMC's iron ore auction amid production disruptions due to extended monsoons

Global iron ore prices rally following Chinese stimulus and pre-holiday restocking

India's largest merchant iron ore mining company, NMDC, increased list prices of iron ore CLO (calibrated lump ore) and fines today by INR 300/t($4) and INR 400/t ($5) respectively, BigMint learnt from sources. The company's prices are effective from 01 October 2024.

The miner has fixed prices of DR CLO (10-40mm, Fe67%) at INR 6,720/t ($80/t) and of iron ore fines (-10mm, Fe64%) at INR 5,010/t ($60/t) on FOR basis from its Bacheli complex. Prices include royalty, DMF and NMET charges.

Factors behind price hike:

1. Bids rise in OMC's iron ore auction - OMC conducted an auction for the 2.4 mnt iron ore on 20 September in which the entire quantity was sold at a premium. Around 1.377 mnt of fines (Fe 54-65%) and 1.021 mnt of lumps (Fe 58-64%) were booked at INR 2,370-4,970/t and INR 3,900-6,800/t, respectively. Bids (weighted average) for the fine and lumps increased by around INR 275/t and INR 50/t against last month. Pellet players actively participated in auction in order to secure high grade ore supplies owing to tight supplies due to extended monsoons this year

2. India's iron ore production drops to one-year low in Aug'24- India's iron ore production fell to 19 mnt in Aug'24, as per data maintained with BigMint. Tight availability of high-grade ore due to extended monsoons have supported the price hike.

3. Global iron ore prices rally following Chinese stimulus and pre-holiday restocking - Global iron ore prices have surged in line with steep recovery in futures seen in China ahead of National week holidays, with the government initiating stimulus measures to boost the economy. China's central bank has announced a plan to reduce the reserve requirement ratio by 50 basis points, aiming to inject around 1 trillion RMB ($142.20 billion) of long-term liquidity into the market. Spot iron ore fines (Fe 62%) prices have risen to $108/t CFR China yesterday against $89/t CFR China assessed on 24 Sept'24. The Indian fines and pellet export market showed positive trends last week, with active trades at higher prices in the seaborne market due to improved sentiments in China.

4. Domestic pellet index rises on improved trades - PELLEX rose by INR 500/t w-o-w to INR 9,100/t DAP Raipur as on 27 Sept'24 following hike in offers in all key markets & improved trades supported by rising sponge offers.

5. Indian steel index recovers after 15-week fall - After 15 weeks of a sustained free-fall, Indian steel prices staged a come-back into the green zone, although these are still hovering at near-four-year-lows. On 27 September, the BigMint India Composite Steel Index rose 1.20% to close at 131.20 points.

The rally was driven by a smart over 3% w-o-w recovery in the longs sector which closed at 134.9 points. Flats, on the other hand, continued to remain depressed, losing less than 1%.