NMDC Cuts Iron Ore Prices by Up to Rs600/tonne in July; PL Capital Sees Near-Term Pressure
- 1st July 2025
- 01:15:00 PM
- 3 min read
Mumbai | July 1 – NMDC Ltd has reduced iron ore prices by Rs500-600 per tonne, marking a nearly 9% month-on-month decline effective July 1, amid weak monsoon demand and subdued global iron ore prices.
The price of lumps has been cut by Rs600 per tonne to Rs5,700, while fines are now priced at Rs4,850 per tonne, down Rs500, including royalty and other statutory charges, according to the company’s latest pricing update.
Seasonal and Global Pressures Weigh on Pricing
The price cut comes as global iron ore prices remain under pressure due to weak Chinese demand and expectations of incremental supply. Domestically, the onset of the monsoon typically results in slower construction and steel activity, prompting miners to adjust prices in line with lower seasonal demand.
Despite these near-term challenges, domestic iron ore demand remains structurally strong, supported by infrastructure spending and steel capacity expansion across the country. However, the near-term softness in demand is expected to weigh on realisations and may impact earnings for the quarter.
Pricing Sensitivity and Financial Impact
Iron ore price movements have a material impact on NMDC’s financial performance. According to PL Capital estimates, a Rs100 change in average realisation can swing the company’s FY26 EBITDA by around 3%.
While the July price cut is steep, there remains scope for NMDC to offset part of the impact if prices are revised upwards later in the quarter as post-monsoon demand recovers.
PL Capital’s View
PL Capital noted that while a price reduction was anticipated for July, the extent of the cut has been sharper than expected.
“A 5% quarter-on-quarter decline in Q2 realisations was already factored in, but the July reduction is higher than anticipated. However, average realisations could still align with projections if NMDC undertakes a 2-3% price increase in September, supported by post-monsoon demand recovery,” PL Capital said in a note.
“This price cut reflects seasonal weakness, while the underlying demand drivers for iron ore in India remain intact. Monitoring post-monsoon price adjustments and volume trajectory will be key to assessing the medium-term outlook for NMDC.”
Production Ramp-Up Remains Critical
NMDC has guided for ~55 million tonnes in production for FY26, and its ability to ramp up volumes will be a key determinant of stock performance in the coming quarters. As demand conditions normalise post-monsoon, maintaining production momentum will be essential for earnings stability in the second half of the fiscal year.
PL Capital Maintains ‘Accumulate’ Rating
PL Capital has maintained its ‘Accumulate’ rating on NMDC with a target price of Rs75, citing confidence in the company’s low-cost operations, stable domestic demand outlook, and the potential for pricing recovery as seasonal conditions improve.
Why This Matters
- The price cut highlights seasonal and global pressures on India’s iron ore and steel value chain.
- Post-monsoon demand recovery will be critical for stabilising realisations and earnings in FY26.
- Investors should track NMDC’s monthly price revisions, production updates, and global iron ore market trends to align investment decisions with sector dynamics.
NMDC shares closed at Rs70 on Monday, down 0.7% ahead of the price cut announcement. The stock has gained 12% so far in 2025, outperforming the broader metals index on expectations of steady domestic demand and stable production growth.
PL Capital
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.
