India: NMDC's iron ore rake movements from Chhattisgarh drop 37% m-o-m in May'24

In May 2024, the National Mineral Development Corporation (NMDC), India's largest iron ore miner, dispatched 309 rakes from its Chhattisgarh mines, equivalent to 1.18 million tonnes (mnt) of iron ore. This marks a 37% drop compared to 488 rakes (1.87 mnt) recorded in May, as per BigMint data.

These rake movements encompass movements within Chhattisgarh and to other state-based units and exclude supply to AM/NS India through slurry pipeline. It is worth noting that each rake carries 3,850 t of iron ore.

The miner witnessed significant disruptions in its production and dispatches due to a workers' strike which erupted in the first week of May. The strike, driven by the demand for a hike in wages, severely impacted the company's operations. Under normal circumstances, NMDC operates 18-20 rakes per day. However, during the strike, this dwindled to 7-8 rakes per day, as per sources.

Sourcing by non-state units drops

Rashtriya Ispat Nigam Ltd (RINL) emerged as the top buyer, with an 29% decrease in iron ore rake movements m-o-m from NMDC Chhattisgarh. In May, RINL received 116 rakes compared to 164 rakes in April. Fall in steel production at RINL was due to stoppage in coal dispatches from Gangavaram port.

JSW Steel received 67 iron ore rakes in May, down 18% as compared with 82 rakes in April.

JSPL record a fall of 43% in its iron ore rake bookings from NMDC at 25 in May, compared to 44 in April.

AM/NS sourced 15 rakes in May, a decline of 66.66% against 45 rakes in April.

KIOCL, a south India-based pellet maker, recently resumed operations - suspended since 25 May - and sourced three rakes in May against just one in April.

Overall, NMDC's total iron ore rake movements to plants outside Chhattisgarh reached 250 in May, reflecting a 35% decline against 382 in April.

Sourcing by Chhattisgarh-based units decline m-o-m: Total number of rakes of NMDC carrying iron ore to the Chhattisgarh-based units was 59 (0.23 mnt) in May, down 44% decrease from 106 rakes (0.41 mnt) recorded in April. In addition, NMDC's supplies to its Nagarnar plant decreased in May to 29 rakes compared to 62 in April. Apart from NMDC's own unit, rake movements recorded a sharp fall to the other steel units of Chhattisgarh by around 71% to 13 rakes in May compared to 45 rakes in April.

Towards end-May NMDC increased list prices of iron ore fines and calibrated lump ore by INR 250/t ($3/t) and INR 350/t ($4/t) respectively. The new prices came into effect from 28 May. The miner has fixed prices of DR CLO (10-40mm, Fe67%) at INR 7,520/t ($90/t) and of iron ore fines (-10mm, Fe64%) at INR 5,610/t ($67/t) on FOR basis from its Bacheli complex. Prices include royalty, DMF and NMET charges.

NMDC recorded output at 2.34 mnt in May, a decrease of 33% m-o-m as against 3.48 mnt in April. Production fell to nearly two years' low in May. Iron ore sales dropped by 20% m-o-m to 2.82 mnt in May as against 3.53 mnt in April. Meanwhile, production volumes decreased by 19% y-o-y to 5.82 mnt in Apr-May'24 over 7.22 mnt in the same period of last year.

Outlook

NMDC is expected to release rakes following the return to normal operations after last month's slowdown. It is likely to pump in higher volumes into the market in the coming days facilitating pre-monsoon restocking.