NMDC Dividend Stock Jumps amid Surge in Global Iron prices

by Psu Connect
Date: 01-10-24
Ministry of Steel

In a bid to counteract economic pressures, the Chinese government is implementing a series of stimulus measures designed to revitalize its economy, which has been grappling with a prolonged slowdown.

The shares of NMDC, India's largest iron ore producer, saw a rally of nearly 6%, reaching Rs 247.20 per share. This surge in stock price can be attributed to a sharp increase in iron ore prices, driven largely by a wave of optimism surrounding China's economic recovery.

In a bid to counteract economic pressures, the Chinese government is implementing a series of stimulus measures designed to revitalize its economy, which has been grappling with a prolonged slowdown.

One of the main focal points of these initiatives is the struggling real estate sector, which has faced a steep decline over the past few years. This downturn has adversely impacted overall economic activity.

The rally in iron ore prices is further supported by a decline in total iron ore inventories at Chinese ports, which fell to 146.6 million tons last week.

Additionally, iron ore shipments from major suppliers, including Australia and Brazil, saw a week-on-week decrease of 4% during the period ending in September. This combination of factors has resulted in iron ore prices soaring by 8.4% to $110.65 per ton in early morning trade, following an 11% rally the previous week.

Furthermore, the central bank has lowered its one-year medium-term lending facility rate and key short-term interest rates to stimulate borrowing and enhance market liquidity.

On the domestic front, India's iron ore production has also reported a notable increase, reaching 116 million metric tons (MMT) during the April-August period of FY 2024-25. This is an increase from 108 MMT during the same period last year, marking a healthy growth rate of 7.4%, according to data from the Ministry of Mines.

Among the key players in the iron ore sector is NMDC, recognized as one of the world's low-cost iron ore producers. The company operates India's only mechanized diamond mine located in Panna, Madhya Pradesh.

To further enhance its operational capabilities, NMDC has recently announced a capital expenditure plan of Rs 2,200 crore for FY25. This investment aims to establish a slurry pipeline and new processing plants, which are essential for expanding production capacity to an ambitious target of 100 MMT by 2030.