India’s iron ore prices are unlikely to recover in the near future given the high inventory levels as well as increasing production, credit rating agency ICRA said today.
On the raw material front, India’s iron ore production in 2015-16 reached 155 MT, registering an annual growth rate of 23 per cent, ICRA said in a statement.
A bulk of the incremental production has come from Odisha, where a number of mines resumed production, it added.
ICRA estimates India’s iron ore output in the current fiscal to be in the range of 170-175 MT, it said.
“Given the substantial iron ore inventory levels at mine-heads and the fact that India’s iron ore production is slated to increase further in the current year, domestic iron ore prices are unlikely to recover meaningfully in the near term, thereby benefiting steel mills,” ICRA Corporate Sector Ratings Senior VP Jayanta Roy said.
The weakness in prices could be seen with the domestic iron ore miner NMDC today cutting down prices for the higher grade lumps by 10 per cent to Rs 1,800 per tonne for the current month compared to May.
The country’s largest miner also reduced the prices of the lower grade of iron ore (Fines) by 12 per cent to Rs 1,460 a tonne for June 2016.
Since April, the state-run giant has slashed iron ore lump prices by 14 per cent and those of fines by 22 per cent.