India: NMDC Iron Ore Dispatches Fall Drastically in May'17
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National Mineral Development Corporation (NMDC) is India's single largest iron ore producer and clocked output of 22 MnT from its Chhatisgarh mines in FY17.The miner has observed sharp decline in iron ore dispatch volumes this month.
Chhattisgarh based units which usually source around 70 rakes from NMDC every month have sharply reduced their sourcing since Apr'17. They sourced only 19 rakes in Apr'17 which has reduced further to 11 rakes in May'17 (till 25th).
JSW Steel and RINL also lowered iron ore sourcing sharply in May'17 - Procurement of iron ore from NMDC (C.G.) by outside state based units also fell in May'17 (till 25th) to 189 rakes against 276 rakes in Apr'17. JSW Steel has procured 38 rakes in May'17 against 66 rakes in Apr'17. Vizag Steel also reduced iron ore sourcing from 163 rakes in Apr'17 to 116 rakes in May'17 (till 25th).
Domestic iron ore prices in India reel under pressure - Declining sponge iron & P-DRI prices along with upcoming iron ore import vessels have put Indian domestic iron ore prices under pressure. It is to be noted that, merchant miners in Odisha reduced iron ore lump prices upto INR 300/MT and fines prices up to INR 150/MT in beginning of May'17. After this, prices remained stable rest part of the month. Trade sources are anticipating prices to go down further in the coming term over lesser dispatches. On the other hand NMDC had rolled over prices for May deliveries.
Below are the factors that continues to weigh Indian iron ore prices:
1. Domestic Sponge prices declined about INR 1,000-2,000/MT in May'17 - Amid dull trades and selling pressure, sponge manufacturers were compelled to slash offers. Sponge prices fell sharply by around INR 1,000-2,000/MT M-o-M in May'17.
C-DRI (80 FeM) prices in Raipur was assesed at INR 16,150/MT (ex-works) on 27 May'17 against INR 17,300/MT (ex-works) a month back. P-DRI (78 FeM) prices in Durgapur was yesterday assesed at INR 14,100/MT (delivered) compared to INR 15,600/MT a month back.
2. Upcoming iron ore import vessels - Sharp decline in global iron ore prices in Apr'17 attracted Indian iron ore importers. Cheaper offers of imported South African lump attracted west India based steel plants. According to customs data maintained with SteelMint, two vessels carrying South African iron ore lump are in pipeline to arrive by the end of this month. Vessel of around 110,000 MT is being imported by Gujarat based steel plants and another vessel of 55,000 MT is being imported by Goa based parties. Apart from these, JSW Steel continues to import Brazilian Carajas fines and Essar Steel imported 112,620 MT iron ore from Brazil.
3. Sharp fall in domestic pellet offers - In line with fall in P-DRI prices, domestic pellet offers also observed correction. East India pellet offers fell by around INR 500-1,000/MT on monthly premises.
