NMDC shares gain 5% on iron ore price hike; Morgan Stanley flags strong tailwinds

Shares of NMDC Ltd. gained nearly 5% on Monday, April 6, after Morgan Stanley highlighted strong pricing tailwinds for the state-run miner following its latest iron ore price revision.

On Sunday, April 5, the state-run company announced a sharp increase in iron ore prices, with lump ore now priced at ₹5,300 per tonne and fines at ₹4,500 per tonne. The latest revision includes a hike of ₹500 per tonne for lumps and ₹450 per tonne for fines.

Morgan Stanley said the price hike reflects a supportive operating environment, driven by firm global iron ore prices, resilient domestic steel demand, and restocking activity.

Seaborne iron ore prices (61% Fe) are currently around $113 per tonne, up roughly 8% since the end of February, aided in part by disruptions in West Asia, the brokerage noted.

Domestic steel prices have also remained elevated, supported by healthy demand and safeguard duties, further underpinning NMDC’s pricing power. Strong steel production levels have also led to increased restocking demand for iron ore.

However, the brokerage firm also flagged potential risks ahead. China’s ongoing steel sector reforms, along with expected higher supply from Guinea’s Simandou project, could weigh on global iron ore prices and sentiment, it noted.

Morgan Stanley added that the evolving geopolitical situation in West Asia remains a key monitorable for commodity markets.

NMDC’s latest price hike marks a cumulative increase of ₹700 per tonne for lumps and ₹600 per tonne for fines since January.

Street sentiment on NMDC remains mixed, according to Bloomberg consensus data. 10 of 23 analysts tracking the stock recommend ‘buy’, five say ‘hold’, and eight give it a ‘sell’ rating.

Shares of the company were trading 4.8% up at ₹81.82 at 12.20 pm on Monday. The stock has delivered almost 33% returns over the last 12 months.

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