NMDC is gaining pricing power as international iron ore prices have stayed robust. Besides, iron ore supplies in Odisha, the biggest producer, continue to remain tight on railway rake disruptions. For its iron ore despatches meant for December, NMDC has hiked prices by 13 per cent, its steepest in two years. International iron ore prices in the same period have seen a spurt of 21 per cent, giving headroom to domestic iron ore producers to raise prices.
Globally, iron ore prices have remained elevated with benchmark prices of 62.5-grade fines hovering around $73 a tonne.
"Demand for high iron ore in China is on the rise as a result of the crackdown on pollution. Steel mills in China are buying more high-grade fines and this has led to prices gaining momentum. In the domestic market, despite a case of oversupply, iron ore prices are firming up as miners take advantage of strong international prices and local supply bottlenecks," said a metal sector analyst.
Despite frequent price hikes, the landed cost of iron ore sourced from NMDC mines is still cheaper by about 30 per cent when compared to the imported material. This price differential, along with supply constraints, gives NMDC scope to go for a further price increase.
The shortfall of railway rakes has hurt movement of iron ore within the country. The problem is more pronounced in Odisha, affecting iron ore despatches to steel and pellet units.