India: NMDC slashes iron ore fines prices to ten-month low in August

India's largest merchant iron ore mining company, NMDC, decreased list prices of iron ore CLO (calibrated lump ore) and fines today by INR 600/t($7) and INR 500/t ($6), BigMint learnt from sources. The company's prices are effective from 7 August 2024.

The miner has fixed prices of DR CLO (10-40mm, Fe67%) at INR 6,420/t ($76/t) and of iron ore fines (-10mm, Fe64%) at INR 4,610/t ($55/t) on FOR basis from its Bacheli complex. Prices include royalty, DMF and NMET charges. Fines prices have hit ten-month low as these price levels were last seen in Oct'23, as per BigMint.

Factors behind price cut:

1. Bids fall in OMC's iron ore auction - In OMC's auction for 1.485 mnt of iron ore fines conducted on 20 Jul'24, entire quantity was booked. Bids decreased around INR 150-400/t for the majority of fines lots against last month owing to a drop in pellet and sponge iron prices. However, response remained active amidst restocking ahead monsoons.

2. Domestic pellet index falls to one-year low - The bi-weekly pellets index DAP Raipur (grade 63%), dropped to INR 9,050/t in mid-July. Prices hit a one-year low because of a decline in export prices and diversion of supplies from eastern India to the domestic market creating a supply glut. That apart, most sponge-makers receded to the sidelines, waiting for pellet prices to fall further.

3. India's iron ore exports fall to over 1.5-year low in Jul'24 amid weak Chinese demand - India's iron ore fines and lumps exports were recorded at 1.86 million tonnes (mnt) in July, 2024 against 2.75 mnt in the same period of last year, showing a m-o-m drop of around 32%, according to data maintained with BigMint. Notably, export volumes were recorded at over 1.5-year low. Chinese iron ore portside inventory stood at around 150 mnt towards end-July, 2024 against 147 mnt towards end-June, 2024. It is to be noted that the inventory has risen to 2.5-year high as same levels were reported in April, 2022, as per SteelHome.

4. Indian steel index at 3.5 years low - India Steel Composite Index is now grovelling at three-and-a-half year lows. On 2 August, 2024, the index closed at 135.5 points, dropping a further 0.4% w-o-w. Somewhat similar level (134.5) were last seen on 18 December, 2020, when the world was well in the throes of the first wave of Covid.