Iron Ore prices to remain range bound in FY19

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Bhubaneswar: Iron Ore prices to largely remain range-bound at the current levels in the current financial year on healthy domestic demand and steady supply.

In the first week of the current month, India’s largest Iron Ore miner NMDC has increased Iron Ore lump prices to Rs.3200 per tonne, fines prices have been hiked to Rs.2810 per tonne.  Similarly, Odisha Mining Corporation (OMC) the Odisha government owned miner has fixed 62% grade lump prices between Rs. 3500 to Rs.4200 and fines prices around Rs. 2180 per tonne ( Daitary mines, 62%. grade).

India Ratings and Research (Ind-Ra) has estimated that during the current financial year the Iron Ore prices will mostly remain range bound at Rs.3050 and Rs 2660 for lumps and fines respectively.

“ Domestic iron ore prices are primarily linked to prices in Odisha (cost plus), import parity or export parity prices (for low grades). Odisha remained the top iron ore-producing state in India in FY18. Considering some large port-based steel producers have an option to import, domestic prices may have to move in tandem with international prices to an extent. The FY19 benchmark iron ore price (China Qingdao 62.0% Fe cost and freight (CFR)) is likely to remain steady at about USD65.0/tonne (FY18: USD64.0/tonne). The weakening of the Indian rupee against the US dollar will pose an upside risk to domestic prices” said Ind-Ra.

Ind-Ra expects healthy domestic demand for iron ore in FY19 in line with a likely higher demand for steel on a year-on-year basis on account of the government’s focus on infrastructure spending and a likely growth in end-user industries such as automobile and white goods. India’s iron ore supply levels are likely to remain steady in FY19 in view a likely slow regulatory response for new mining volumes owing to the general elections in 2019. Global iron ore merchant demand-supply balance will remain tight in FY19, considering grades are declining and cost of production is rising in China.

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