After NMDC, Odisha miners follow suit and hike iron ore prices

Representative image
Taking cues from NMDC, the country's largest iron ore miner, lessees in Odisha have hiked ore prices by up to Rs 500 per tonne in less than a month. Over the past two weeks, prices of 62.5 per cent-grade iron ore fines have appreciated by 12-14 per cent, much in line with the steep hikes effected by NMDC for its December deliveries.  

Key merchant iron ore producers in Odisha like Rungta Mines and KJS Ahluwalia have gone for sharp price increases. For Rungta Mines, ex-mine price of 62.5-grade iron ore fines has gone up from Rs 1,575 to Rs 1,925 per tonne (as on December 26), a rise of 22 per cent within a month.

"Global prices have remained buoyant. Also, NMDC has gone for steep price hikes for iron ore recently. The combined impact of the two factors has offered scope to the iron ore miners to jack up prices. We feel the price momentum will continue as demand is supporting prices," said a leading iron ore miner.

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.