NMDC cuts iron ore prices by ₹200/tonne as steel prices fall

State-owned largest iron ore producer has cut iron ore prices by about ₹200 a tonne amid a fall in steel prices and a decline in bids at Odisha Mining Corporation’s recent auction.

“The prices have come down a bit, but we don’t know if this is structural. It may even go up in the coming days based on market trends,” said a person in the know of the matter.

Steel Research and analysis firm, SteelMint reported on Sunday that the NMDC’s Baila Fe 65.5% iron ore lump prices have come down by ₹200 a tonne to ₹ 7,450 a tonne, prices of Baila 64%Fe iron ore lump has come down by 200 a tonne to ₹6,360 a tonne. In June, NMDC’s lump ore prices (65.5% Fe) were at ₹7,650 a tonne and iron ore fines (64% Fe) at 6,560 a tonne.

“We are seeing demand from other steel plants. However, looking at the current monsoon season, we see a downtrend in prices of steel so that would probably again affect our pricing,” Sumit Deb, NMDC’s chief managing director said during an interaction with the analysts after the company’s Q4 results He added that in the long-term, the company believes that prices will be strong and will remain stable.

“The production in Odisha has also gone up but I believe there is a substantial uptick in the demand also because most of the steel plants have ramped up capacities to 80%, 90% so the demand still exists,” Deb said.

This comes at a time when India’s top steelmakers last week announced a price cut, after almost a year of back-to-back price hikes. Benchmark hot-rolled coil (HRC) prices were down by around ₹1,500 to ₹2,000 a tonne for July.

Domestic HRC prices are now at record high of around ₹68,500 a tonne as against ₹70,000 – ₹69,000 a tonne. Steelmakers said that the reason for the steel price hike is due to high input prices. For example, the price of 62% Fe iron ore fines increased a whopping 344% to around ₹7,000 last month from ₹1,575 in May 2020.

“What will now be needed is that domestic iron ore suppliers (including NMDC) should also follow the reduction given by the Indian mills for the domestic market,” said steelmaker ArcelorMittal Nippon Steel India’s chief marketing officer, Ranjan Dhar.

Bids at OMC’s auction dropped by ₹1,100-1,950 per tonne compared to bids received in the May auction.

“There is a sharp decline in bids at OMC’s recent auction that have resulted in the price correction. Bids at OMC’s auction dropped by ₹1,100-1,950/t compared to bids received in the company’s May auction,” said SteelMint in its research report.

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