The Hindu Business Line : Mining stocks gain on price revision hopes

Mumbai, April 7 Mining stocks seem to have gotten a boost on Monday as State run miner National Mineral Development Corporation (NMDC) Ltd said that it is likely to revise its prices in May.

It would decide on the new iron ore long-term contract prices after talks with certain Japanese clients, which is due to begin in May. The scrip was up 10 per cent from its previous close on Friday. The stock surged Rs 1,011.35 to end the day at Rs 11,124.95. Market men say that other mining stocks also posted gains on the bourses today due to this news.

Gujarat Mineral Development Corporation Ltd was by Rs 10.40 or 3.84 per cent and closed the day at Rs 281.15 and Gujarat NRE Coke Ltd was up by 13.67 per cent to close the day at Rs 162.15. The share price of the country’s top iron ore exporter Sesa Goa advanced 3.55 per cent or Rs 97 to close the day at Rs 2,829.40.

“There was good recovery in the Sesa Goa counter due the anticipation of NMDC increasing its prices. The stock is trading at good levels now making it even more attractive to the investors,” said Mr Pawan Burde, a metal analyst with Angel Broking. NMDC’s increase in iron ore price would be 65-70 per cent of the increase in international contract prices of iron ore.

But on the other hand, the Government is asking iron ore producers to lower the prices as rising iron ore prices are leading to steel prices soaring too. “Higher iron ore and coal prices have sent steel prices higher and earlier this week domestic steel companies agreed to limit exports to increase supplies,” said the head of research at a stock broking firm.

Last week, steel stocks took a beating due to pressure from the Government to cut steel prices by 10-20 per cent. Steel prices in the country have jumped by more than a fifth in the past three months.

“A meeting was called of the iron ore producers by the Steel Ministry at the beginning of the month to appeal to them to slightly lower the prices to domestic companies. But as of now nothing that will hurt the iron ore mining companies has been announced,” said Mr Burde.

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