Shares of NMDC, India’s biggest iron ore producer, jumped by nearly 5.5% in early morning trading on Monday, pushing the stock price to ₹247.50 per share.
This spike follows a sharp rise in iron ore prices, spurred by increasing optimism around China’s ongoing economic recovery efforts.
The Chinese government has been rolling out various stimulus measures to revive its slowing economy, with a special focus on reviving its real estate sector.
China’s stimulus and its impact on iron ore demand
China has been facing a prolonged economic slowdown, especially in its construction and real estate sectors.
As part of its recovery efforts, Beijing is easing regulations in key cities like Shanghai, Guangzhou, and Shenzhen to stabilize the property market.
This shift has had a direct effect on the demand for raw materials like iron ore, which is crucial for construction projects.
Adding to this, iron ore inventories at Chinese ports dropped to 146.6 million tons last week. Shipments from major producers like Australia and Brazil also fell by 4% week-on-week.
These factors combined to push iron ore prices up by 8.4%, reaching $110.65 per ton in early morning trading. This follows an 11% price increase from the previous week.
Base metal prices also saw a lift, with copper rising 1% to $10,083.50 per ton and zinc increasing by 0.7% on the London Metal Exchange (LME).
Boost from China’s central bank policies
In addition to measures supporting the real estate sector, China’s central bank, the People’s Bank of China (PBoC), has also been implementing policies to inject liquidity into the economy.
Last week, the PBoC cut banks’ reserve requirement ratios by 50 basis points for the second time this year, releasing around 1 trillion yuan into the market.
The central bank also lowered key interest rates to stimulate lending and encourage economic activity.
These moves have improved investor sentiment and boosted the metals market, which has seen significant price gains in recent days.
NMDC benefits from global demand growth
NMDC, a significant player in the iron ore industry, is benefiting from the global rise in demand.
India’s domestic iron ore production has also surged, growing by 7.4% in the April-August period of FY25.
Production reached 116 million metric tons (MMT) compared to 108 MMT in the same period last year.
Iron ore remains a vital part of India’s mineral production, accounting for around 70% of the country’s total mineral output by value.
NMDC, known for being one of the lowest-cost iron ore producers in the world, has been expanding its operations to meet growing demand.
Recently, the company announced plans for a ₹22 billion capital expenditure for FY25.
This investment will fund the construction of a slurry pipeline and new processing plants, part of NMDC’s strategy to increase its production capacity to 100 MMT by 2030.
NMDC’s strong market position
NMDC holds a significant advantage with access to high-quality iron ore reserves that are expected to last for at least the next 40 years.
Indian brokerage firm LKP Securities has emphasized that NMDC is in a prime position to benefit from rising steel demand and renewed capital spending, similar to the boom seen between 2003 and 2007.
With China’s economy beginning to recover and global demand for iron ore on the rise, NMDC is expected to continue its upward trajectory.
The company’s long-term reserves and strategic investments are likely to further solidify its standing as a key player in the global iron ore market.
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