NMDC increased iron ore prices for various grades by 7-9% for Sep 2017
Lump (65%) Price up 7.3%,
Fines (65%) Price up 8.1%,
ROM (65%) Price up 8.5%,
DR CLO (67%) Price up 8.5%
What was the trade action in NMDC last week ?
Mild Bullish Bias. Likely to trend higher in the first half of next week.
Technically, stock has seen good buying and has upward bias.
Next resistance would be 136 (r1), 139-42 (r2) Support would be 125-127.
I do not believe this is a major breakout rally, it is about a upward drifting rally.
Why these prices have been increased ?
International prices, in particular, in China have increased by 8% since August 1
Adjusted for import levies, NMDC is able to grade its price with respect to the domestic landed cost of imported iron ore price.
What it means for you as investor in the stock ?
In June quarter, NMDC Iron Ore prices rose by an average 6%. In September quarter, now after price increase, September price will be again near to June quarter closing iron ore price. Remember, before this price increase, NMDC Iron ore price had declined 8-9% this quarter.
Price increase effectively improved September Quarter earnings potential. Commodity prices fluctuate frequently but being a producer, NMDC directly reaps gains as profits if Price goes up. Largely, the raw material costs have remained almost same, so, expect margins to improve in September quarter.