NMDC halves iron ore rates as slump bites

THE COM­PANY’S SALES FELL 17% DUR­ING APRIL-AU­GUST THIS FIS­CAL AS PRO­DUC­TION DROPPED 13%; AN­A­LYSTS SEE MORE CUTS AHEAD

Resource Digest - - CONTENTS -

State-owned miner NMDC has slashed prices of iron ore fines by more than 52% to Rs 1,460 per tonne for the cur­rent month as com­pared to Rs 3,060 a tonne in Jan­uary this year as it faces sub­dued ore de­mand.

The price of the higher grade iron ore (lumps) has been re­duced by 41% to Rs 2,500 per tonne for Oc­to­ber 2015 com­pared to Rs 4,200 a tonne in Jan­uary this year.

Con­sid­er­ing the global iron ore sup­ply-de­mand sce­nario, an­a­lysts are of the view that a fur­ther down­ward re­vi­sion in prices by NMDC is pos­si­ble in the near term.

NMDC saw its sales go down 17% to 11.27 mil­lion tonne (mt) for April-Au­gust pe­riod this fis­cal from 13.57 mt dur­ing the same pe­riod in 2014-15. Pro­duc­tion was also down 13% to 10.52 mt from 12.10 mt dur­ing the same pe­riod.

In­dia’s largest iron ore miner’s pro­duc­tion rose by just a per cent to 30.4 mt in the last fis­cal ended March, 2015 against the year-ago pe­riod, while sales reg­is­tered a mar­ginal in­crease to 30.5 mt dur­ing the same pe­riod.

Faced with de­clin­ing sales, the pub­lic sec­tor un­der­tak­ing (PSU) has con­sis­tently slashed iron ore prices since Jan­uary.

For Septem­ber, NMDC had put iron ore lump prices at Rs 2,850 per tonne and that of fines at Rs 1,660 a tonne.

Like­wise for July 2015, the price of lumps was Rs 2,950 per tonne and that of fines was Rs 1,660 per tonne.

The pub­lic sec­tor com­pany had fixed lump ore prices at Rs 3,050, Rs 3,250 and Rs 3,750 per tonne in April, March and Fe­bru­ary, re­spec­tively this year.

While, prices of fines stood at Rs 1,960, Rs 2,460 and Rs 2,760 per tonne in April, March and Fe­bru­ary, re­spec­tively.

At the com­pany’s an­nual gen­eral meet­ing last month, its chair­man and man­ag­ing di­rec­tor Naren­dra Kothari had said that sur­plus steel pro­duc­tion glob­ally has im­pacted the prices of the metal and in turn also af­fected iron ore and cok­ing coal rates.

“Global iron ore is also fac­ing a sim­i­lar over-sup­ply sce­nario. Due to the world­wide sub­dued steel de­mand, global iron ore prices have seen a down­ward trend in 2014-15. The pres­sure on steel prices is likely to con­tinue in near fu­ture, which has been forecast for iron ore also,” he said.

Mar­ket in­sid­ers at­tribute the price re­duc­tion to an ex­pected higher pro­duc­tion glob­ally as well as in In­dia, which will lead to in­creased sup­ply of iron ore amidst a sub­dued de­mand by the con­sum­ing in­dus­tries such as steel. At present, iron ore prices in in­ter­na­tional mar­kets are trad­ing in the range of $54-56 a tonne, over 25% from the record low of $44-45 in July 2015, but still nowhere near the lev­els of same time last year, they added.

Iron ore prices were in the range of $68-70 in De­cem­ber 2014. Since then, they went south from $66-67 per tonne in Jan­uary 2015 to $62-64 (Fe­bru­ary), $56-58 (March), $51-53 (April). In May, the prices inched up to $61-63 but June rates again de­clined to the $58 range.

For July-Au­gust, the rates have been hov­er­ing in the range of $53-56 a tonne.

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