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
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.