A robust growth in domestic demand and elevated pellet prices have led to a rise in prices of iron ore in India, according to a report by ratings agency CRISIL.
At September-end, state-owned NMDC raised prices of iron ore lump by Rs 300 per tonne week-on-week, and hiked iron-ore fines prices by Rs 200 per tonne week-on-week.
Over the past six months, while global iron ore prices were fairly steady at $65-70 per tonne, domestic iron ore prices surged 40-45 per cent on a year-on-year basis.
As a result, the spread between landed prices and domestic prices of ore has reduced, CRISIL analysts said.
“Currently, the 62 Fe grade domestic ore trades at a 16 per cent discount to the landed price, compared with a 45 per cent discount in fiscal 2017 and a 31 per cent discount in fiscal 2018. Currency erosion in the past few months has also played a role in boosting prices,” they said in the report.
In August, miners raised prices by Rs 600-700 per tonne in two tranches. NMDC, on the other hand, raised prices by mere Rs 150 per tonne, according to analysts. “Odisha’s iron ore production dived 25 per cent month-on-month to 6.8 million tonnes (the lowest in past 12 months) amid seasonally-weak monsoon quarter.
Prior to August, Odisha’s production had been in excess of 9 million tonnes for three consecutive quarters,” analysts said.