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The NMDC stock gained 10 per cent last week after the iron-ore major raised ore prices, effective January 2017. Prices of higher grade lumps were increased by about 6 per cent while those for lower grade fines were hiked by about 7 per cent. Ore prices were hiked by 20 per cent (for lumps and fines) in October 2016.
Globally, iron ore prices, which were on a downtrend since early 2013 to touch a low in 2015, have revived. Prices increased from $40 per tonne in early 2016 to about $53 per tonne. One reason for the price rise was the pick-up in Chinese steel manufacturing.
High ore prices may be short-lived as inventory levels in China are at a two-and-a-half year high and global steel demand may not revive meaningfully. In India, where steel demand is estimated to be more robust, higher ore production may cap price hikes. With the lifting of mining bans in various States, supply is increasing.
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