NMDC lowered the price of its iron ore. This is the third rate cut since the government raised tariffs on all grades of iron ore exports. From July 12, NMDC’s lump ore prices and fines are Rs 3,900 per ton and Rs 2,810 per ton, respectively. That’s down about 36% and 45.5%, respectively, from levels before the government raised export tariffs at the end of April.

Investors are not happy. Shares in the state-owned miner fell more than 5% in early trade on the National Stock Exchange (NSE) on Tuesday, pulling the shares down to a 52-week low of Rs 101.55 set on June 20.

As a result, analysts expect domestic prices to remain under pressure given the fall in global iron ore prices. “Global (Australian) iron ore prices have fallen 12% to $109 a tonne as of July 22, compared to $123 a tonne on June 22. Local iron ore prices continue to trade well below imported ore prices (we Note that local ore prices are of poorer quality and higher alumina content),” analysts at Nomura Financial Advisory and Securities (India) said in a July 11 report.

A weak demand environment exacerbated the woes. Despite the May-June price cut, NMDC’s sales in the June quarter (Q1 FY23) fell 20% year-on-year to 7.7 tonnes. Construction activity slowed during the monsoon season, affecting steel demand. Note that iron ore is a key raw material used in steel production.

“India is an oversupplied iron ore market with exports accounting for about 10% of production and export tariffs making exports unviable. We note that the market glut is likely to worsen in FY23 due to lower exports and increased captive mine production,” Kotak Institutional Equities analysts said in a July 11 report.

In this context, brokerages lowered NMDC’s trading volume forecast by 3%/2%/2% and currently expect FY23/24/25E to be 41/43/44 tons, respectively. FY22 sales were 40.7 million tonnes.

In addition, Kotak has cut its Ebitda forecast by 7%/7%/8% for FY23/24/25E. Ebitda is an acronym for Earnings Before Interest, Taxes, Depreciation and Amortization.

Shares of NMDC have fallen nearly 38% over the past year, while the Nifty Metal sector index has fallen much more slowly, at 8.4%.